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Market Snapshot: Post-Fed Risk-On Unwinds

SOUTH AFRICA
BulletEM BulletEmerging Markets
  • The tide has turned towards risk-off this afternoon as markets continue to digest last night’s fed decision amid stagflationary concerns.
  • Initial optimism regarding Powell’s limited appetite for +75bp hikes has now faded and flipped to risk-off with US equities plummeting at the open.
  • USD/ZAR has fully pared yesterday’s move lower and now trades +2.61% higher around 14.83 in line with softer global risk conditions. Given its high-beta nature, ZAR has traded in a volatile 4.91% range between 15.40 & 16.20 this week with 1m implied vols trading towards the upper end of their range YTD.
  • SAGBs have also trimmed early bull flattening gains with 10-30Y tenors giving back 5-6bp in gains as UST yields move sharply higher at the US open. Both the 10 & 30Y failed to move below key support at 10.20 & 10.80 and will eye 10.40 & 1100 as the next major resistance levels.
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  • The tide has turned towards risk-off this afternoon as markets continue to digest last night’s fed decision amid stagflationary concerns.
  • Initial optimism regarding Powell’s limited appetite for +75bp hikes has now faded and flipped to risk-off with US equities plummeting at the open.
  • USD/ZAR has fully pared yesterday’s move lower and now trades +2.61% higher around 14.83 in line with softer global risk conditions. Given its high-beta nature, ZAR has traded in a volatile 4.91% range between 15.40 & 16.20 this week with 1m implied vols trading towards the upper end of their range YTD.
  • SAGBs have also trimmed early bull flattening gains with 10-30Y tenors giving back 5-6bp in gains as UST yields move sharply higher at the US open. Both the 10 & 30Y failed to move below key support at 10.20 & 10.80 and will eye 10.40 & 1100 as the next major resistance levels.