PSG Money Market comment - Jun 12 - Fund Manager Comment20 Aug 2012
Global developments continued to dominate markets in June. Fears of a Greek exit from the Eurozone dissipated after the Greek elections in mid June.
The good news for the month was that CPI for May returned within the SARB's target band of 3% to 6%. Headline CPI slowed to 5.7% y-o-y (April was 6.1% y-o-y). This moderation in inflation is encouraging and is expected to continue, with further decreases in fuel prices.
Vehicle sales figure for June was 15.6% y-o-y. This was down from May's 20.7% y-o-y, but still encouraging. On the other hand, retail sales released during the month for April showed a slow done to 1% y-o-y (previous 6.8%).
The moderation in inflation, coupled with growth concerns, has fuelled speculation of the SA Reserve Bank cutting interest rates. The FRA curve has also priced this in.
Our view is still for the SARB to keep rates unchanged for the remainder of the year, ceteris paribus.
PSG Money Market comment - Mar 12 - Fund Manager Comment16 May 2012
Headline CPI for March came in lower at 6.0% y/y (previous 6.1%). Of interest to note is the increasing trend in core inflation (CPI excluding food, NAB, petrol and energy), which came in at 4.4% y/y (previous 4.3%). Food and NAB inflation continued its downward trend which contributed 8.6% y/y (previous 9.6%).
PSCE for March increased to 9.2% y/y (previous 7.9%), which was driven by corporate credit. February's retail sales also came in stronger than expected at 7.2% y/y.
Big news in the bond market for the month was the announcement that SA government bonds are being considered for inclusion into Citi Bank's WGBI (World Government Bond Index). Bond yields rallied on the back of this news and foreigners continued accumulating local bonds.
Our outlook is still for the SARB to keep rates unchanged for the rest of the year, assuming global and domestic conditions don't change drastically.
PSG Money Market comment - Dec 11 - Fund Manager Comment22 Feb 2012
During 2011 the repo rate was left unchanged at 5.5% despite inflation rising from 3.5% to above 6%.
Real growth in the economy disappointed over 2011 as production in the primary sector, especially mining, contracted sharply. In contrast, real retail sales have grown by a healthy 7%. Household and government consumption will be the main contributors to economic growth in 2012. Exports may disappoint as the European economy will suffer from the debt crisis.
In November CPI rose by 0.3% taking the annual rate to 6.1% year-onyear. The increase in food and fuel prices is the biggest drivers of higher inflation.