After the flurry of economic activity last week, this week is far quieter with no major data releases due. This gives us a chance to take stock of South Africa’s current market position and year-end expectations. Following last week’s cut to 6.75%, the 2-year and 3-year swap rates initially dropped to 6.44% and 6.45% on Friday before edging back up to 6.47% and 6.49% today. The curve continues to price in just under two additional cuts over the next year.
On page 3 of the monitoring sheet, you will see that last week’s slight uptick in CPI to 3.6% has not shifted market expectations, with year-end inflation still forecast at 3.30%. The Rand is trading weaker at 17.36, but bank forecasts still point to a recovery towards 17.12 by year-end.
