Five Things Everyone Will Be Talking About Today
The South African rand continues its meltdown, another Chinese executive goes missing, and here comes another year of oil glut. Here are some of the things people in markets are talking about today.
The South African rand briefly broke through 16 per dollar this morning as fallout from President Jacob Zuma's abrupt firing of his finance minister continues. Yields on benchmark government bonds due Dec. 2026 climbed to 10.6 percent and the South African bank share index has seen $11 billion wiped off its value in the last two days. We're seeing selling elsewhere in emerging market currencies today, including Turkey, Brazil, and Russia, where the ruble is at its lowest level since august.
Brent declined to $39 a barrel, its lowest level since Dec. 31 2008, in London trading while West Texas Intermediate for January delivery was at $36.25 a barrel on the New York Mercantile Exchange. The price falls come after the International Energy Agency said in a report this morning that the global oil surplus will persist until at least late 2016. West Texas Intermediate is down around 11 percent in just the last month.
Another Chinese executive goes missing
Trading in shares of Fosun International Ltd. was suspended in Hong Kong after Caixin magazine reported that group CEO and billionaire Guo Guangchang had gone missing. Fosun, a sprawling empire encompassing insurance, real estate, and entertainment, is the latest in a surprisingly long list of Chinese companies to misplace senior executives. Guo considers himself a student of Warren Buffett and has been described as the Warren Buffett of China.
The Chinese yuan recorded its biggest weekly drop since August's surprise devaluation dropping 0.27 percent on Friday to close at 6.4553 per dollar. China's central bank has lowered its daily yuan fixing on seven of nine trading days since winning reserve-currency status at the International Monetary Fund on Nov. 30. The falling yuan has helped push the yield advantage of China’s sovereign debt over U.S. Treasuries to the narrowest in five years, leaving investors with fewer reasons to buy Chinese debt just as that country's bond market opens wider. As the Federal Reserve prepares to hike interest rates and the dollar continues its uptrend, the link between the yuan and the dollar is seen as increasingly inappropriate.
It's only five sleeps until Fed decision day, so every U.S. data point will be very closely watched for anything that might derail the rate hike consensus, and today there will be plenty of data points on offer. At 8:30 a.m. ET U.S. retail sales data for November are released, with producer prices due at the same time. Economists are looking for a jump of 0.4 percent in retail sales excluding auto and gas spending. At 10:00 a.m. the latest University of Michigan Consumer Sentiment Index comes out, with expectations for a small increase to 92 for December.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Forget oil and the rand, it is butter that is really sliding..
- .. although it has been carnage across commodities in 2015.
- Russia's central bank decided to maintain rates unchanged.
- While the ECB gives banks €18 billion in loans aimed at the real economy.
- Oil traders aren't dancing the crude contango this time around.
- Donald Trump has America's CEOs nervous and very quiet, for now.
- Climate critics fume as Paris talks near deal.
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