Sanlam Money Market comment - Sep 06 - Fund Manager Comment02 Nov 2006
During the past quarter the SA Reserve Bank decided to increase the repo rate from 7.50% to 8.00%. This was in line with market expectations.
There are numerous concerns in the market about money supply and private sector credit extension being too high, the negative current account balance, and rand weakness feeding through to inflation. During the quarter, the 3-month and 12-month Jibar rates increased from 7.54% to 8.31% and 8.64% to 9.38% respectively.
We expect the money-market curve to flatten over the next few months as rates at the short end of the money market increase much faster than those at the long end.
Current forward rates in the market suggest that the repo rate will be increased to 8.5% at the next MPC meeting on 12 October, while another hike in December is likely.
Our strategy in this market has been to stay short, but slowly increase exposure towards the long end.
Sanlam Money Market comment - Jun 06 - Fund Manager Comment01 Aug 2006
The 3-month and 12-month Jibar rates started the quarter at 7.09% and 7.36% respectively. Higher than expected M3 and private sector credit extension figures resulted in some nervousness in the money market during May. The 12-month Jibar rate increased from 7.36% to 7.72%, discounting an increase in the repo rate. The SA Reserve Bank decided on 8 June to increase the repo rate from 7% to 7.50%. The increase resulted in more volatility, with the rand weakening due to the sell-off in metal commodities and emerging markets in general. The 3-month and 12-month Jibar rates ended the quarter at 7.54% and 8.59% respectively.
Current forward rates in the market suggest that the repo rate will be increased at the next MPC meeting on 3 August to 8%, while another increase in October cannot be ruled out. The very steep money-market curve at the end of the quarter is further confirmation of this.
Sanlam Money Market comment - Mar 06 - Fund Manager Comment28 Apr 2006
On 2 February the SARB decided to keep the repo rate unchanged at 7%. The 3-month and 1-year JIBAR rates drifted sideways between 7.05% and 7.09% in the 3 months and between 7.20% and 7.40% in the 1 year. Current forward rates in the market suggest that the repo could stay unchanged at 7% at least for the next 12 months. Money-market investors therefore appear to be of the opinion that short-term interest rates will drift sideways from current levels.
The money-market yield curve remained very flat at the end of the quarter. Money-market asset selection and not duration will play an important part in the yield achieved by money-market portfolios.
Looking forward, the next MPC meeting will take place between 12 and 13 April and we expect the SARB to keep the repo rate unchanged at 7%.
Sanlam Money Market comment - Dec 05 - Fund Manager Comment20 Jan 2006
During the quarter the SARB decided to keep the repo rate unchanged at 7%. The 3-month and 1-year JIBAR rates started the quarter at 6.99% and 7.38% respectively and rose as high as 7.25% and 7.78% as inflation expectations rose. Due to much better than expected inflation numbers published in December, the 3-month and 12-month JIBAR rates settled at 7.05% and 7.35% respectively.
At the end of the quarter the money-market yield curve became flat, which suggests a stable money-market environment for at least the next 12 months.
Money-market investors appear to be of the opinion that short-term interest rates will drift sideways from current levels.
We do expect money-market rates to stabilise at current levels.