Daily Market Report – 9 Apr 2025

ZAR on a Knife Edge as GNU Teeters

GNU Risks Keep the ZAR Under Pressure

The ZAR’s volatility is no longer just about the Trump tariffs or the global recession fears — it’s now being squarely driven by domestic political dysfunction, namely the increasing likelihood of a GNU fracture.

• The DA’s rejection of the fiscal framework has forced ANC to seek support from less predictable partners (ActionSA, BOSA).
• Deputy President Mashatile warns the DA’s stance undermines GNU cohesion and foreshadows legislative gridlock.
• The DA’s legal challenge to the VAT increase may stall or completely derail upcoming Appropriations and Division of Revenue Bills.

Bottom line: Investors now see no clear path forward on fiscal consolidation without damaging GDP growth. And that’s hitting the ZAR hard.

FX Focus – ZAR in GNU Limbo, USD Overbought

• Spot: 19.78
• Range: 19.43 – 19.9150
• Resistance: 19.9165 (May 2023 high)
• Support: 19.4300 / 19.4000

Technical Lens: The pair looks heavily overbought. A bull flag appears to be maturing, and momentum is fading. But fundamentals may still override chart signals.

Until there’s a resolution on the GNU or clarity on SA’s fiscal trajectory, the ZAR will remain an EM underperformer – even with a weakening USD and global recession trade boosting other EM peers.

Bonds – Long-Term Risk Premium Back with a Vengeance

• SAGB yields still significantly elevated, despite some tactical buying yesterday.
• Today’s bond story: Heightened political risk + uncertain budget path = higher debt service costs baked in.

Paradox alert: The longer the impasse lasts, the smaller the actual budget deficit may be. Why? Spending remains frozen under 2024/25 levels, while tax receipts gradually climb with inflation.

But if that political dividend is to be reaped, compromise must come quickly, and GNU stability must return.

FRAs – SARB Seen Leaning Dovish Amid Recession Clouds

With Fed Funds futures pricing in ~100bp of US cuts, the SARB has cover to move more dovishly — provided ZAR stability returns. Until then, SARB will stay cautious.

Global Trade Chaos – Markets Eye Legal Tariff Challenge

• Trump’s 50% hike on China tariffs met with immediate retaliation threats.
• Legal scholars challenge use of IEEPA (1977) to impose global duties.
• VIX hits 60 – highest since the COVID market meltdown.
• Trump approval odds on Polymarket collapse from 80% → 22%.

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