In the loop

What you should know this morning:

• The rand is steady this morning, at R16.67/$, after closing weaker yesterday (R16.68/$*).
• EM currencies were largely down yesterday; the RON (-2.4%), HUF (-1.8%) and MXN (-1.8%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.

• Iran war: markets viewed the recent negotiations between the US and Iran as the clearest opportunity in months to de-escalate the conflict.
• However, the absence of agreement on key issues and the continued exchange of military threats suggested that the risk of renewed confrontation remained high.

• The Eurozone CPI report for September will be the key data release in the region today.
• Headline CPI is expected to have increased to 3.7% y/y in September, from 3.2% y/y in August.
• A headline increase is likely to illustrate the broad impact of the energy shock on the Eurozone economy.
• Core CPI is expected at 2.5% y/y in September, up from 2.4% y/y in August.

• The UK Decision Maker Panel (DMP) survey for September is scheduled for release today.
• The 1-year ahead inflation expectations are likely to have increased to 3.3% in September, from 3.1% in August.
• The 3-month inflation expectations moderated to 3.1% in August, from 3.4% in July.
• Policymakers at the BOE will watch the survey closely for signals on inflation persistence risks.

• Fed Vice Chair Philip Jefferson yesterday said that policymakers may need more time to determine whether further interest rate increases are necessary to bring inflation under control.
• He warned that inflation has remained too high for too long and could stay elevated.
• However, he said that future policy decisions will depend on incoming data, the evolving economic outlook and the balance of risks.

• Dallas Fed President Lorie Logan struck a more hawkish tone, saying further rate increases are needed to fully contain inflation. 
• However, she noted that higher Treasury yields, particularly through rising term premiums, could slow the economy and reduce the amount of additional monetary tightening required. 
• Logan estimates that the policy rate may need to rise by another 50 bps or more to appropriately balance the risks to the Fed's dual mandate.

• The US non-farm payrolls (NFP) for September are due out today; payrolls are expected to have increased by 85k in September, after having increased by 162k in August.
• The unemployment rate is likely to have remained unchanged, at 4.1%.
• Average hourly earnings growth is forecast to have remained around 3.1% y/y in September, indicating that wage pressures remain contained.
• Investors will be watching closely to determine whether August's strong payroll gain represented a genuine improvement in labour demand or merely a temporary rebound.
• A stronger-than-expected report would reinforce expectations that the US labour market remains resilient and could support the case for the Fed to maintain a restrictive policy stance.

• Locally, it's a quiet day as far as data releases are concerned.

• Brent crude is down this morning, and up by 67.4% year-to-date.
• The gold price is up this morning, and down by 3.4% year-to-date.

• Brent crude oil is currently at $101.85/bbl; ($102.31/bbl*).
• Gold is at $4189/oz ($4177/oz*).
• SA CDS 141bps*, Brazil 131bps* and Turkey 256bps*.
• Yields: US 10yr at 5.24%*, German bund at 3.50%*, SA 10-year generic at 9.05%*, SA's R2035 at 8.56%*.

* Denotes yesterday's close. 

Key events and data:

• 10h30: UK DMP 3m and 1yr inflation expectations (September)
• 11h00: Eurozone CPI (September)
• 14h30: US non-farm payrolls (September), unemployment rate (September)
• 16h00: US factory orders (August), durable goods (August – final)

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