Bullish Fundamental indicators
• Rising domestic inflationary influences point towards real yields continuing to compress. Having peaked above 6% in Q1, they are set to dip below 4%, as CPI looks set to advance from September’s 5.0% amidst ongoing food and energy price gains
• Having moved beyond the mid-point of the 3-6% SARB target range in August, prices risk threatening the top of the price corridor into year-end. The recent ZAR depreciation will exacerbate the jump in the global oil price, as WTI has gained almost 30% in local currency terms across the period. While inflation expectations have yet to become materially de-anchored, signs of an uptick in wage deals, as the metalworkers union agreed to a 5-6% hike, point towards the need for central bank action to restrain inflationary pressures
• Having moved beyond the mid-point of the 3-6% SARB target range in August, prices risk threatening the top of the price corridor into year-end. The recent ZAR depreciation will exacerbate the jump in the global oil price, as WTI has gained almost 30% in local currency terms across the period. While inflation expectations have yet to become materially de-anchored, signs of an uptick in wage deals, as the metalworkers union agreed to a 5-6% hike, point towards the need for central bank action to restrain inflationary pressures
