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In the loop 08 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.54/$, after closing weaker yesterday (R18.48/$*).
  • EM currencies were mixed yesterday; the KRW (+0.2%), COP (+0.2%) and BGN (+0.2%) were the biggest gainers; the CLP (-0.7%), THB (-0.3%) and HUF (-0.2%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
  • Minneapolis Fed President Neel Kashkari noted an interest rate cut by the Fed this year as "certainly still a possibility".
  • He added that it is too soon to say that inflation progress has stalled.
  • Kashkari highlighted that if inflation trended sideways and the labour market remained strong, the Fed should hold rates steady at the current level. 
  • He reiterated Fed Chair Jerome Powell’s earlier comments that, if price pressures start to slip again or there was a "marked weakening" in the labour market, the Fed could consider cutting interest rates.
  • Kashkari expects the Fed funds rate to remain where it is “for an extended period of time” until such a time that policymakers are certain about inflation being on track to return to the bank’s target.
  • ECB Governing Council member Joachim Nagel commented yesterday that “forces including geopolitics and decarbonization could keep consumer-price growth elevated in the years ahead”.
  • He also cited demographic trends that may lead to “persistently higher wage growth”.
  • The ECB is largely expected to start its interest rate cutting cycle as early as June.
  • Sweden’s Riksbank will meet today and is expected to cut its benchmark interest rate by 25 bps, to 3.75%.
  • The Riksbank signalled an almost even split likelihood between a May and June rate cut at its last meeting in March.
  • Sweden’s headline inflation surprised to the downside in Match, supporting the case for the central bank to start its rate cutting cycle. 
  • German industrial production is likely to have fallen by 0.7% m/m in March, after having increased by 2.3% m/m in February.
  • On a y/y basis, production is likely to be down by 3.6% in March, following a 4.9% decline in February.
  • Locally, gross and net reserves for April are scheduled for release today. 
  • Gross reserves were at $62.32 in March, while net reserves were at $57.51 in March.
  • Eskom: loadshedding remains suspended until further notice.
  • Brent crude is down this morning, and up by 7.3% year-to-date.
  • The gold price is up this morning, and up by 12.5% year-to-date.
  • Brent crude oil is currently at $82.68/bbl; ($83.16/bbl*).
  • Gold is at $2320/oz ($2312/oz*).
  • SA CDS 225bps*, Brazil 136bps* and Turkey 282bps*.
  • Yields: US 10yr at 4.45%*, German bund at 2.42%*, SA 10-year generic at 11.83%*, SA’s R2030 at 10.58%*.

* Denotes yesterday’s close.

Key events and data:

  • 08h00: SA gross and net reserves
  • 08h00: German industrial production (March)
  • 09h30: Swedish Riksbank interest rate decision – 25 bps cut expected
  • 13h00: US mortgage applications (3 May)
  • 16h00: US wholesale trade sales (March)

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