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In the loop 10 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.47/$, after closing stronger yesterday (R18.51/$*).
  • EM currencies were mixed yesterday; the CLP (+1.4%), PEN (+0.9%) and CZK (+0.6%) were the biggest gainers; the RUB (-1.0%), BRL (-1.0%) and KRW (-0.5%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.
  • BOE Chief Economist Huw Pill noted yesterday that the central bank would consider cutting rates over the next few meetings, on condition of “no big disturbances" in the economy.
  • Pill noted the bank as “confident we can start to reduce policy restriction, but we're not there yet”.
  • Pill also noted that global interest rate moves may be less synchronized.
  • The UK GDP for Q1:24 is due out today and is expected to signal this economy as recovering from a protracted period of stagnation.
  • GDP growth is likely to come in at 0.4% q/q in Q1:24, after having contracted by 0.3% q/q in Q4:23.
  • Monthly GDP for March is likely to come in at 0.1% m/m, following a 0.1% m/m increase in February.
  • This would see the UK economy exiting the recession of 2023.
  • The visible trade balance is also on the cards today; the trade deficit is likely to have widened in March, to £14.40bn, from a deficit of £14.21bn in February.
  • Investors will keep a close eye on the minutes of the ECB’s April monetary policy meeting minutes for further guidance on the number of interest rate cuts likely to follow the first interest rate reduction.
  • ECB President Christine Lagarde noted in the press conference after the meeting that several policymakers preferred a cut at the April meeting, rather than waiting for June.
  • The ECB is largely expected to cut rates at its 6 June policy meeting.
  • San Francisco Fed Governor Mary Daly commented that interest rates are currently restraining the US economy but it may take some time before inflation returns to the bank’s goal.
  • She noted the uncertainty about what the next few months of inflation may be and what the Fed may do in response. 
  • The US University of Michigan survey will likely show that consumer sentiment deteriorated in early May.
  • The index is likely to have slipped to 76.2 in May, from 77.2 in April.
  • Such slippage in sentiment would be in line with the recent fall in the Conference Board’s consumer confidence index.
  • The 1-yr inflation expectations are expected to have remained unchanged, at 3.2% in May; the 5-10-yr inflation expectations are also likely to have remained unchanged, at 3.0% in May.
  • Eskom: loadshedding remains suspended until further notice.
  • Brent crude is up this morning, and up by 9.6% year-to-date.
  • The gold price is up this morning, and up by 14.2% year-to-date.
  • Brent crude oil is currently at $84.43/bbl; ($83.88/bbl*).
  • Gold is at $2355/oz ($2329/oz*).
  • SA CDS 226bps*, Brazil 139bps* and Turkey 276bps*.
  • Yields: US 10yr at 4.45%*, German bund at 2.49%*, SA 10-year generic at 11.92%*, SA’s R2030 at 10.51%*.

* Denotes yesterday’s close.

Key events and data:

  • 08h00: UK GDP (Q1:24), industrial production (March), manufacturing production (March), trade balance (March)
  • 13h30: Eurozone ECB monetary policy committee meeting minutes (April meeting)
  • 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (May)

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