In the loop 13 November 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.09/$, after closing weaker yesterday (R18.15/$*).
EM currencies were largely down yesterday; the RUB (-2.9%), COP (-2.0%) and THB (1.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.

Richmond Fed President Tom Barkin has noted the US economy as currently in a good place and in a position to respond appropriately.
This has allowed the Fed to lower borrowing costs.
Barkin added that “strong but choosier consumer, coupled with a more productive and better valued workforce, has landed the economy in a good place”.
He highlighted that increasingly price-sensitive consumers have helped to curb inflation, while the US labour market has remained resilient.
He also noted two scenarios following the re-election of Donald Trump.
Barkin commented that as election uncertainty fades, companies could begin investing and hire again, “leaving the Fed to focus on upside inflation risks”.
Alternatively, companies might respond to margin compression from weaker pricing power by reducing their workforce.
This could elevate employment risks for the Fed.

Minneapolis Fed President Neel Kashkari commented that only an upside surprise on inflation data could derail a December interest rate cut.
He’ll be keeping a close eye on today’s CPI outcome to determine whether another interest-rate cut would be appropriate at the December meeting.

The Fed Bank of New York survey showed that the US consumer inflation outlook fell slightly in October.
Inflation expectations dropped to 2.9% over the next year (the lowest since October 2020), and to 2.5% over the next three years, and to 2.8% over a five-year period.
The survey noted that the outlook for personal income has held steady, while workers are feeling more confident about the labour market.

The October US CPI will be in focus today and is likely to come in at 2.6% y/y, from 2.4% y/y in September.
On a m/m basis, headline CPI is likely to have increased by 0.2% in October, the same as in September.
Core CPI is expected to come in at 3.3% y/y in October, also unchanged from September.
We still expect the Fed to trim the Fed funds rate further in December.

Brent crude oil is currently at $72.08/bbl; ($71.89/bbl*).
Gold is at $2606/oz ($2597/oz*).
SA CDS 184bps*, Brazil 159bps* and Turkey 256bps*.
Yields: US 10yr at 4.42%*, German bund at 2.36%*, SA 10-year generic at 10.40%*, SA’s R2035 at 10.45%*.

* Denotes yesterday’s close.

Key events and data:

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