In today’s briefing:
- South African Rand’s Outperformance Is Overdone
- UK: More For Less In Work
South African Rand’s Outperformance Is Overdone
- Given the current uncertainties stemming from the Fed monetary tightening and Russia’s invasion, trading opportunities are creeping up as short-term mispricing tend to occur in such environments.
- One such opportunity could be the South African rand, which has outperformed on a year-to-date basis relative to other emerging market currencies.
- I see headwinds for the rand: the carry is low in real terms and versus volatility, the current account is set to deteriorate, growth remains a concern and it’s expensive.
UK: More For Less In Work
- The shrinking UK labour market drove another 11bps decline in the unemployment rate to 3.8% in Feb-22. Average hours are continuing to rebound rather than headcount.
- People over 50 are voluntarily leaving work with little interest in returning, which makes it unlikely they will be available to fulfil high business demand for labour.
- Wage growth is failing to keep pace with excessive inflation. The squeeze is most intense for lower-income workers who are typically most likely to spend income.
Before it’s here, it’s on Smartkarma
