In the loop 17 April 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R19.06/$, after closing weaker yesterday (R19.02/$*).
EM currencies were largely down yesterday; the IDR (-2.0%), MXN (-2.0%) and BRL (-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.

BOE Governor Andrew Bailey commented yesterday about it being possible that the central bank might be able to cut rates before the Fed.
He noted inflation dynamics in these two economies as diverging, adding that there is more “demand-led inflation pressure in the US than in the UK”.
BOE policymakers Catherine Mann, Jonathan Haskel and Megan Greene have cautioned about price pressures in the UK economy.

UK CPI for March is scheduled for release today and is expected to have moderated to 3.1% y/y, from 3.4% y/y in February.
Prices of food, core goods and services are likely to have been the main driver of the expected moderation in headline CPI in March.
Headline inflation will probably fall further in April.
Core CPI is likely to come in at 4.1% y/y in March, from 4.5% y/y in February.
With inflation set to moderate swiftly in the coming months, the BOE is largely expected to begin its interest rate cutting cycle soon.
The Eurozone CPI for March (final estimate) is due also due out today; headline and core inflation both declined marginally in March.

Fed Chair Jerome Powell noted yesterday that the Fed would likely wait longer than previously anticipated to cut interest rates.
This comes after a series of higher-than-expected inflation outcomes.
Powell noted no further progress having been made on inflation after the initial rapid moderation seen towards the end of 2023.
As such, it will take time for policymakers to gain the confidence that inflation is headed toward the bank’s inflation target.
Only then could one expect the interest rate cutting cycle to start.

The US Fed’s Beige Book for April will be released today and will likely describe activity, on balance, as increasing slightly.
This is likely to echo the view expressed in March.
Services improved in March, while manufacturing deteriorated.

Locally, the March CPI is expected to come in at 5.4% y/y, from 5.6% y/y in February.
Core CPI is expected at 4.9% y/y in March, from 5.0% y/y in February.
Retail sales for February are also due out today; sales are likely to have fallen further, by 1.3% y/y, following a decline of 2.1% y/y in January.
Retail sales are expected to have increased by 1.2% m/m in February, from a decline of 3.2% m/m in January.
Eskom: loadshedding remains suspended until further notice.

Brent crude oil is currently at $89.47/bbl; ($90.02/bbl*).
Gold is at $2379/oz ($2397/oz*).
SA CDS 264bps*, Brazil 163bps* and Turkey 322bps*.
Yields: US 10yr at 4.66%*, German bund at 2.48%*, SA 10-year generic at 12.27%*, SA’s R2030 at 10.85%*.

* Denotes yesterday’s close.

Key events and data:

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