Taiwo Adekeye, FMVA
March 12, 2024
Oil prices were a bit changed on Monday as concern eased as regarding fighting in the Middle East would disrupt supply and Chinese data suggested weak demand, while an increase in U.S. refining limited any selling. Brent futures for May delivery settled at $82.21 a barrel, gaining 13 cents while the U.S. crude April contract slipped 8 cents to end at $77.93 a barrel. However, both benchmarks were down last week after bearish Chinese data implied weaker demand in the world’s leading crude importer. Brent closed down 1.8%, although the contract has remained above $80 a barrel for over a month. WTI ended 2.5% lower.
India: The Indian bond yield curve is anticipated to flatten further as long-term rates fall
India’s government bond yield curve is projected to flatten more in the coming weeks as long-term interest rates fall on strong demand for longer-term securities. The curve is the flattest in nine months, with the spread between the central bank policy rate and benchmark bond yield easing to 50 basis points on Monday, up from 90 bps in October. India’s 10-year bond yield fell to within a range of 7% on Monday, while the repo rate is at 6.5% and the overnight rate, which is anchored to the policy rate, has averaged between 6.65%-6.80% in the last four months. With downward trending yields, it is expected the 10-year benchmark bond yield could decline to 6.50% over the next six months, with a high chance of it falling below the repo rate before any rate cut.
China: Consumer prices in China rise due to seasonal Lunar New Year gains.
China’s consumer prices surged for the first time in six months as a result of spending linked to the Lunar New Year, offering some relieve for the world’s second-biggest economy battling with weak consumer sentiment, while witnessing a decline in factory-gate prices. The consumer price index (CPI) climbed 0.7% year-on-year in February while In February this year, CPI rose 1.0% month-on-month, outpacing the 0.3% uptick in January. The year-on-year growth in consumer prices was also the highest in 11 months, sustained by gains in some key foodstuffs such as pork and fresh vegetables, as well as travel amid a seasonal rush around Lunar New Year in February.
South Africa: The South African rand maintains its gains in the absence of local data.
South Africa’s Rand firmed on Monday, maintaining from last week in the absence of any major domestic economic releases. The dollar index was last trading up almost 0.2% against a basket of currencies, as investors anticipate U.S. inflation data on today which could influence the Federal Reserve’s path of interest rates. The Rand traded at 18.6750 against the USD, about 0.3% stronger than its previous close. South Africa’s benchmark 2030 government bond was marginally stronger, with the yield down 0.5 basis point to 10.105%. Additionally, South Africa’s gold, mining and manufacturing production figures for January will be released this week.
