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Morgan Stanley Remain Neutral on SAGBs Headed into the Budget

SOUTH AFRICA
  • They write that risks seem to be skewed towards a deterioration in thefiscal outlook. Their economists project a worse budget compared to the 2022 MTBPS guidance. More specifically, the budget deficit forecasts for the upcoming 2023/24 and 2024/25 fiscal years are seen wider by 0.6pp and 0.7pp
  • On peak SARB rates, risks are generally to the upside given the poor performance of ZAR over the past few weeks. If the market reprices higher, it can put some pressure on duration at the long end of the curve, especially as there are less supportive global factors compared to a few weeks ago.

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