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In the loop 21 September 2023

In the loop

Shireen Darmalingam

What you should know this morning: 

  • The rand is weaker this morning, at R18.93/$, after closing stronger yesterday (R18.68/$*).
  • EM currencies were mixed yesterday: the PLN (+1.3%), ZAR (+1.3%) and RUB (+0.8%) were the biggest gainers; the THB (-0.3%), BRL (-0.3%) and PEN (-0.3%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down. 
  • The Fed’s FOMC kept the Fed funds rate unchanged yesterday, as expected.
  • The FOMC signalled that borrowing costs would likely stay higher for longer after one more hike this year.
  • The Fed updated its quarterly projections, which indicates that 12 of the 19 policymakers expect another rate hike this year. 
  • Policymakers also foresee less easing in rates next year.
  • Fed Chair Jerome Powell commented that the Fed needs to get to a “place where we are confident we can bring inflation down to 2% over time”.
  • The UK’s BOE will meet today and is expected to hike its benchmark interest rate by 25 bps, to 5.5%.
  • However, yesterday’s lower-than-expected inflation data for August opened the door to the prospects for a possible pause in rates at today’s meeting.
  • The UK Chamber of Commerce, on news of the lower CPI print, urged the BOE to consider pausing its rate hiking cycle.
  • The Swedish Riksbank is expected to lift its policy rate to 4% today. 
  • This could mark the end of its tightening cycle, given the signs the economy is headed for recession.
  • The SNB may also raise rates today; this will likely be the last rate rise in this hiking cycle. 
  • The Turkish Central Bank is expected to hike its one-week repo rate by 500 bps to 30%.
  • The central bank hiked by 750 bps at its last meeting in August and will add to the cumulative 1650 bps increase in the key rate since May. 
  • The policy rate is expected to reach 35% by year-end and likely stay there through Q1:24.
  • Locally, the SARB’s MPC decision is in the spotlight today; the bank is largely expected to keep the repo rate unchanged at 8.25%.
  • We’ll keep a close watch on changes to the SARB’s GDP and inflation forecasts. 
  • Eskom: Loadshedding has been suspended until 4pm; Stage 3 loadshedding will be implemented then.
  • Brent crude oil is down this morning, and up by 8.2% year-to-date.
  • The gold price is down this morning, and up by 5.7% year-to-date.
  • Brent crude oil is currently at $92.95/bbl; ($93.53/bbl*).
  • Gold is at $1928/oz ($1946/oz*).
  • SA CDS 259bps*, Brazil 178bps* and Turkey 389bps*.
  • Yields: US 10yr at 4.40%*, German bund at 2.70%* and SA 10-year generic at 11.71%*, SA’s R2030 at 10.44%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 13h00: UK BOE interest rate decision – 25 bps hike expected
  • 15h00: SA SARB interest rate decision – no change expected
  • 14h30: US current account balance (Q2:23), initial jobless claims (16 September)
  • 16h00: Eurozone consumer confidence (September)
  • 16h00: US existing home sales (August), leading index (August)

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