In the loop

What you should know this morning:

• The rand is weaker this morning, at R16.52/$, after closing weaker yesterday (R16.46/$*).
• EM currencies were mixed yesterday; the PHP (+0.9%), THB (+0.7%) and IDR (+0.5%) were the biggest gainers; the CLP (-1.4%), KRW (-1.1%) and MXN (-1.1%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• Iran war: despite signs that the US midterm results could strengthen incentives for a negotiated settlement, attacks on shipping continued and major differences over the sequencing and scope of nuclear talks left the risk of renewed military escalation high.

• Following the BOE's 25 bps rate hike to 4.00% yesterday, Governor Andrew Bailey stressed that the move should not be viewed as the start of an inevitable series of interest rate increases.
• He said that, while another hike could be necessary if the conflict in the Middle East remains unresolved and elevated energy prices continue to fuel inflation, the future path of policy will depend on how these risks evolve.
• Bailey noted that financial markets are pricing more tightening than expected, partly reflecting a risk premium for the possibility of a further sharp rise in energy prices.
• His comments imply that the BoE remains open to additional tightening but will take a conditional, data-dependent approach rather than following a predetermined hiking cycle.

• ECB Council member Ante Zigman yesterday said that he sees a “rather big chance” of another interest rate hike in December, reinforcing expectations that the ECB may resume tightening after pausing in October.
• He noted that Eurozone inflation continued to rise in October and is now running at roughly twice the ECB's 2% target, keeping pressure on policymakers to act.
• However, Zigman said it remains too early to determine how much additional tightening will ultimately be required, particularly in 2027.
• He also highlighted uncertainty surrounding energy prices, noting that oil prices have fallen sharply in recent days.
• However, he added that the outlook remains highly uncertain, suggesting the pace of further tightening will remain dependent on inflation and energy-market developments.

• ECB President Christine Lagarde commented that incoming economic data and updated staff projections in December would help policymakers determine whether another interest rate increase was necessary.
• Lagarde acknowledged that inflation remained well above the ECB's 2% target, having reached 4% in October, largely driven by higher food and energy prices. 
• She noted that the energy shock stemming from the Iran war was simultaneously pushing inflation higher and weighing on economic growth, complicating the monetary policy outlook. 
• Lagarde stressed the importance of adopting a measured approach to monetary policy.

• The Eurozone retail sales for September are scheduled for release today and are expected to have increased by 0.6% y/y, following a 0.8% y/y increase in August.
• On a m/m basis, retail sales are likely to have declined by 0.1% in September, after having increased by 0.1% in August.
• German industrial production, also due out today, is expected to have increased by 1.2% y/y in September, down from a 2.3% y/y increase in August. 

• Cleveland Fed President Beth Hammack yesterday commented that US monetary policy would need to become restrictive to bring inflation back to the Fed's 2% target in a timely manner. 
• Hammack noted that inflation has remained above the Fed's target for nearly six years, adding that price pressures are becoming increasingly broad-based and reflecting both supply- and demand-side factors. 
• She advocated more frequent, smaller interest rate increases.
• She argued that a gradual approach would minimise disruptions to households, businesses and financial markets, while reducing the risk of inflation expectations becoming entrenched. 

• The US non-farm payrolls for October are on the cards today; payrolls are expected to have increased by 65k in October, after having increased by 28k in September.
• The unemployment rate is likely to have remained unchanged in October, at 4.2%.
• The University of Michigan's consumer sentiment index for November is also scheduled for release; the index is expected to have remained steady, at 48.0.

• Locally, SARB Governor Lesetja Kganyago this week warned that the loss of preferential US trade access under AGOA could significantly affect exports, particularly the automotive and citrus industries and dependent regions.
• Kganyago expressed disappointment over the decision but remained hopeful it could be reversed during the 60-day window for SA to address US concerns.

• It's a quiet day as far as data releases are concerned.

• Brent crude is up this morning, and up by 63.4% year-to-date.
• The gold price is down this morning, and down by 6.5% year-to-date.

• Brent crude oil is currently at $99.45/bbl; ($98.29/bbl*).
• Gold is at $4040/oz ($4088/oz*).
• SA CDS 121bps*, Brazil 146bps* and Turkey 249bps*.
• Yields: US 10yr at 4.83%*, German bund at 3.24%*, SA 10-year generic at 8.44%*, SA's R2035 at 8.26%*.

* Denotes yesterday's close.

Key events and data: 

• 09h00: Germany industrial production (September)
• 12h00: Eurozone retail sales (September)
• 15h30: US non-farm payrolls (October), unemployment rate (October)
• 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (November)
• 22h00: US consumer credit (September)

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