In the loop 08 October 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R17.43/$, after closing stronger yesterday (R17.38/$*).
EM currencies were mixed yesterday; the ZAR (+0.6%), KRW (+0.3%) and BGN (+0.1%) were the biggest gainers; the MYR (-1.5%), IDR (-1.2%) 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.

ECB Governing Council member Robert Holzmann noted yesterday that the central bank should not declare victory over inflation prematurely as underlying price pressures remain high.
He said that “inflation is on the right track — but it isn’t defeated”.
He added that one of the main drivers of moderating inflation is falling energy costs.
CPI is currently below the ECB 2% target for the first time since 2021; the central bank is largely expected to cut interest rates for a third time next week.

German industrial production for August is scheduled for release today; recent sentiment data has pointed to bleak near-term prospects, especially in the industrial sector.
Industrial production is expected to have increased by 0.8% m/m in August, after having declined by 2.4% m/m in July.
On a y/y basis, production is expected to have declined by 3.8% in August, following a 5.3% decline in July.
Industrial production has been affected by weak global demand, high energy prices, and tight financing conditions.

The US NFIB small business optimism index for September, due out today, is likely to have improved to 92.0, from 91.2 in August.
In August, a net 13% of business owners reported that they planned to hire in the next three months.
The measure remains below the pre-pandemic average when a net 19% of business owners said they planned to hire in the next three months at that time.
Small businesses still seem to be competing for talent; large business seem to be hiring more.
The US trade balance data for August is expected to reflect a narrowing deficit, to $70.5bn, from a deficit of $78.8bn in July.
The advance goods trade balance data has shown that imports fell in August, led by a decline in industrial supplies and automotive imports.

Minneapolis Fed President Neel Kashkari commented yesterday that the balance of risks has shifted away from higher inflation towards higher unemployment.
New York President John Williams noted that the Fed is “well positioned” for a soft landing.
He expressed his preference to move interest rates to a “neutral” setting that no longer dampened demand “over time”.
St. Louis Fed President Alberto Musalem warned against easing interest rates too quickly.
Several US policymakers are due to make comments on the economy and monetary policy today.

Brent crude oil is currently at $79.77/bbl; ($80.93/bbl*).
Gold is at $2644/oz ($2646/oz*).
SA CDS 180bps*, Brazil 145bps* and Turkey 278bps*.
Yields: US 10yr at 4.02%*, German bund at 2.25%*, SA 10-year generic at 10.37%*, SA’s R2035 at 10.44%*.

* Denotes yesterday’s close.

Key events and data:

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