In the loop 07 January 2025

In the loop

Christelle Grobler

What you should know this morning:

The rand is trading at R18.57/$ this morning, after closing stronger yesterday (R18.59/$*).
EM currencies were mixed yesterday; the RUB (+2.9%), MXN (+1.4%) and PLN (+1.2%) gained the most; the THB (-0.5%), ARS (-0.2%) and MYR (-0.2%) lost the most.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

US factory orders contracted in November; total new manufacturing orders declined 0.4% m/m, after rising by an upwardly revised 0.5% m/m (0.2% m/m previously) in October.
Excluding transportation, orders rose 0.2% m/m in November, matching October’s increase (revised to 0.2% m/m, from 0.1% m/m reported previously).
Today sees the release of the US trade balance for November; the trade deficit likely widened slightly during the month.

Fed Governor Lisa Cook yesterday said that she backs a cautious approach to further rate cuts.
She cited a resilient labour market and stickier inflation to argue that the Fed can afford to proceed cautiously with future cuts.
However, she said she does not see the labour market as a source of significant inflationary pressure.
Cook noted that the rate cuts since September “have notably reduced the restrictiveness of monetary policy”.
“I continue to see inflation as gradually – if unevenly – returning over time to our goal of 2% in a sustainable manner,” Cook said.
“Over time, I still think it will likely be appropriate to move the policy rate toward a more neutral stance,” said Cook.

ECB 1-year and 3-year inflation expectations for November will be released today.
In October, 1-year inflation expectations stood at 2.5% and 3-year expectations registered 2.1%.
Preliminary Eurozone inflation data for December as well as the Eurozone unemployment rate for November are due today.
Eurozone CPI likely accelerated to 2.4% y/y in December, from 2.2% y/y in November.
The Eurozone unemployment rate is expected to have remained unchanged at 6.3% in November.

Japan’s monetary base contracted by 1.0% y/y in December, after declining 0.3% y/y in November.
Japanese Finance Minister Katsunobu Kato remarked that it cannot be ruled out that Japan falls back into deflation and that the end of deflation will be judged comprehensively.
Kato reiterated the government’s existing stance on the foreign exchange market, noting that they will take action against excessive moves deemed to be speculative and out of line with fundamentals.

UK BRC sales surprised on the upside in December.
Like-for-like sales increased 3.1% y/y in December after declining by 3.4% y/y in November.
Black Friday sales counted under the December figures last year, while it was recorded in November in 2023, hence distorting the annual comparison.
Non-food like-for-like sales rose 5.3% y/y; corresponding food sales increased 1.6% y/y in December.

Brent crude oil is currently at $76.26/bbl; ($76.30/bbl*).
Gold is at $2644/oz ($2637/oz*).
SA CDS 190bps*, Brazil 194bps* and Turkey 259bps*.
Yields: US 10yr at 4.63%*, German bund at 2.45%*, SA 10-year generic at 10.25%*, SA’s R2035 at 10.27%*.

* Denotes yesterday’s close.

Key events and data:

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