ECONOMY WATCH: No end in sight yet to a tumultuous year
The financial markets are unlikely to get any respite from their recent turmoil given the interest rate and political risks that loom in December
As SA heads into the home stretch of 2018, the financial markets are unlikely to get any respite from their recent turmoil given the interest rate and political risks that loom in December. As ever, the key focus will be the interplay between the dollar and US interest rates. The markets are assigning an 80% probability to a 25 basis point hike at the December 18-19 federal open market committee (FOMC) meeting, in line with the Federal Reserve’s consistent messaging on the need to tighten policy further in the face of robust US growth. Matrix Fund Managers economist Carmen Nel says whether this will help or hinder emerging-market currencies will depend on the dollar’s reaction to the FOMC statements as well as to any revisions to Fed members’ individual interest rate forecasts. "There is little reason yet for the Fed to meaningfully change its forecasts, which means that risk assets such as the rand should absorb the December hike reasonably well," she says. Absa fixed income and cu...
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