A sharp rally in South African assets pushes the Rand toward the 18.00 mark
The formation of a Government of National Unity comprising more centrist parties and the perceived optimistic economic and growth outlook has seen a sharp rally in the JSE and good demand for local bonds from offshore investors. The JSE All Share was the best-performing index of all those tracked by Bloomberg globally yesterday as it gained 3.5% on the day, while yesterday’s local Government bond auction was five times oversubscribed. The local equity and bond markets have lagged global markets, and we could see further inflows in the coming weeks. The Rand strengthened a further 1.15% against the Dollar yesterday, closing near the 18.00 level at 18.03. The local currency has also made good gains against the Euro and Pound, currently quoted at 19.37 and 22.93, respectively. Today, we have the inauguration of Cyril Ramaphosa as President, but markets will be looking at the announcement of the new Cabinet later in the week. Today, we also have our local CPI data due for release.

US retail sales disappoint, Dollar trading flat
US retail sales data was on the softer side yesterday, lifting rate cut hopes slightly, and the dollar closed flat after initially firming yesterday morning. US bond yields moved around 6bps lower across the curve while Wall Street closed in the green. The DXY index is marginally higher this morning, with the Euro trading at 1.0717 and the Pound at 1.2711. We have several Fed officials talking this week, and markets will be watching for any change in the hawkish Fed speak given the recent softer inflation and labour market data.

Commodities steady, oil holding above $85.00
Gold, Platinum, and Palladium are all trading relatively flat this morning. Base metals are showing small gains, while Brent crude is holding above the $85.00 level. Fears of an escalation conflict in the Middle East with Israel warning of a war with Hezbollah is currently underpinning the price of oil.