In the loop 15 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.36/$, after closing weaker yesterday (R18.38/$*).
EM currencies were mixed yesterday; the COP (+1.1%), CLP (+0.8%) and PLN (+0.6%) were the biggest gainers; the ZAR (-0.2%), TRY (-0.2%) and MXN (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

The People’s Bank of China has kept its 1-yr medium-term facility rate unchanged, at 2.5%.
However, the case for easing rates remains strong.

US Fed Chair Jerome Powell reiterated yesterday that the Fed would need to be patient as it awaits more evidence that high interest rates are curbing inflation.
He noted that it may take longer than previously thought to attain the confidence needed to lower interest rates.
Powell described monetary policy as restrictive by “many, many measures”.
He added that time would tell if policy is sufficiently restrictive to steer inflation back to the Fed’s 2% inflation target.
Kansas City Fed President Jeffrey Schmid said that interest rates could remain high “for some time” as policymakers await evidence that price pressures are easing.
Minneapolis Fed President Neal Kashkari and Fed Governor Michelle Bowman are due to make comments on the US economy later today.

The US April CPI is in the spotlight today; both headline and core inflation are likely to have moderated in April.
Headline CPI is likely to come in at 3.4% y/y in April, from 3.5% y/y in March; core CPI is expected at 3.6% y/y in April, from 3.8% y/y in March.
The outcome will likely have an impact on the start of the Fed’s interest rate cutting cycle.
Should CPI overshoot expectations, it could further delay the first interest rate cut.
The Fed, however, is largely expected to begin its rate cutting cycle in Q3:24.

US retail sales for April likely slowed entering Q2:24 from March’s elevated pace.
Business inventories for March likely declined by 0.1% m/m in March, following an increase of 0.4% m/m in February.
The NAHB housing market index for May is due for release today; sentiment among home builders likely slipped in May.

The Eurozone Q1:24 GDP is likely to come in at 0.3% q/q, matching the increase in Q4:23.
Eurozone industrial production for March is likely to have increased by 0.4% m/m, from 0.8% m/m in February.

Locally, retail sales for March are expected to have declined by 0.6% y/y, following the 0.8% y/y decline in February.
On a m/m basis, sales are likely to have increased by 0.2% in March, after increasing by 0.4% in February.
Eskom: loadshedding remains suspended until further notice.

Brent crude oil is currently at $82.88/bbl; ($82.38/bbl*).
Gold is at $2356/oz ($2354/oz*).
SA CDS 227bps*, Brazil 141bps* and Turkey 275bps*.
Yields: US 10yr at 4.43%*, German bund at 2.54%*, SA 10-year generic at 11.90%*, SA’s R2030 at 10.49%*.

* Denotes yesterday’s close.

Key events and data:

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