9 Jan

Daily Market Report 9 Jan

Key Insights

Manufacturing & Sales: SA’s Absa PMI fell to 46.2 pts in December, reflecting weaker business activity and new orders. While passenger vehicle sales grew by +8.2% y/y, commercial vehicle sales declined, highlighting ongoing business challenges.

Municipal Debt Crisis: Local government debt, including R110bn owed to Eskom, is unsustainable. Most municipalities face financial distress, with debt exceeding R1 trillion when combined with SOE and infrastructure liabilities.

Market Insight – FX

ZAR: Depreciated to 18.9200, driven by USD strength as Fed rate cuts for 2025 remain limited. Resistance lies at 19.0750, with support at 18.7250.

Global Trends: USD strengthened on strong US labour data and resilient Treasury yields, while EUR and GBP weakened on concerns about fiscal risks and stagflation.

Market Insight – Fixed Income

SA Bonds: Despite resilience, bond yields face upward pressure from global selloffs and local fiscal risks. Debt mismanagement at municipal levels and lack of private sector involvement are key concerns.

Global Bonds: US 10-year Treasury yields climbed to 4.73%, with global bond markets reflecting inflationary pressures, government debts, and political uncertainty under Trump’s incoming presidency.

Strategic Focus

Reforms Needed: Tackling local debt and ensuring fiscal discipline, while leveraging private sector participation, is critical to stabilise growth and investor confidence.

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