The US Fed cut interest rates in September, which was in line with consensus. Markets are pricing in a further 3 to 4 cuts by 2021. Locally, the Monetary Policy Committee (MPC) members unanimously decided to leave the repo rate unchanged at 6.5% and stated, "The implied path of policy rates over the forecast period generated by the Quarterly Projection Model indicated no changes to the repo rate." Forward rate agreements are now pricing a lower chance of a cut over the next 12 months, having moved out by 17bps after the MPC statement.

The release of the Medium Term Budget Policy Statement (MTBPS) has been delayed to the 30th of October, which won't give Moody's much time to analyse details proposed by the budget for the year ahead, before their rating review announcement on the 1st of November. These will be key events driving the month ahead. The Fund is still earning an attractive real yield of between 3.5% and 4%, with a strong focus on high quality, shorter term liquid assets. We remain cognisant of the looming risks and will again wait for an opportunity to increase the duration in the Fund. The Fund outperformed its benchmark in September as well as over the last twelve months. The bulk of the performance came from good quality paper held in the portfolio, which generated yield over and above the benchmark.

The Monetary Policy Committee unanimously kept the repo rate unchanged at 6.75% last month. From the meeting, mention was made that upside risks remain locally with administered prices and the oil price named as specific concerns. Meanwhile, global factors countered these to some degree with downside risks of lower global inflation amidst the revision lower for the global growth outlook, and thus the accommodative monetary policies in place. The National Energy Regulation Agency (NERSA) granted Eskom tariff increases of 9.4%, 8.1% and 5.22% for years through 2019-2021 respectively.

Towards month-end, the rand weakened with most other emerging market currencies as Turkey implemented additional foreign exchange controls to prevent the lira from depreciating further. After waiting on tenterhooks for an extended period, Moody's eventually refrained from publishing any review on SA. With the low inflation prints over the previous three months, the forward rates priced in the market, continued to show no move in rates over the next 12 months. The Fund outperformed its benchmark in March as well as over the last twelve months. The bulk of the performance came from good quality credit held in the portfolio, which generated yield over and above the benchmark.