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In the loop 13 September 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.92/$, after closing weaker yesterday (R18.93/$*).
  • EM currencies were mixed yesterday; the RUB (+1.0%), MXN (+0.6%) and KRW (+0.3%) were the biggest gainers; the PLN (-0.7%), RON (-0.5%) and HUF (-0.5%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down. 
  • The ECB noted yesterday that it expects inflation in the Eurozone to remain above 3% next year.
  • This bolsters the case for the ECB to hike its benchmark interest rate when meeting on Thursday.
  • This rate decision is likely to be a close call. 
  • Eurozone industrial production for July is scheduled for release today and likely declined by 0.9% m/m, after having increased by 0.5% m/m in June.
  • Business surveys are still well into contraction while factory orders are pointing to weak demand ahead.
  • As such, industrial production is likely to remain subdued throughout the third quarter.
  • The UK monthly GDP for July is on the cards today and is expected to have declined by 0.2% m/m, after having increased by 0.5% m/m in June.
  • Growth was surprisingly strong in June despite high inflation and tight monetary policy.
  • The rebound in June was supported by May’s extra national holiday to celebrate the coronation of King Charles, while the warmer-than-usual weather also supported activity.
  • However, higher interest rates and falling house prices are likely to have impacted activity in July.
  • The US CPI for August is due out today; it will likely paint a mixed picture. 
  • CPI is expected to have increased by 0.6% m/m in August, from a 0.2% m/m increase in July. 
  • Core CPI is expected to come in at 0.2% m/m in August, matching July’s increase.
  • The market might therefore infer scope for the Fed to hike interest rates further. 
  • The Fed, however, will likely place more weight on the fact that core CPI has been moderating on a m/m and y/y basis.
  • The Fed will meet next week (19-20 September). 
  • Eskom: Stage 6 loadshedding is currently in place and will continue until further notice.
  • Eskom noted that this comes on the back of the loss of four generating units, the need to replenish its emergency generation reserves, and increased planned maintenance.
  • Brent crude oil is up this morning, and up by 7.4% year-to-date.
  • The gold price is down this morning, and up by 4.8% year-to-date.
  • Brent crude oil is currently at $92.29/bbl; ($92.06/bbl*).
  • Gold is at $1910/oz ($1912/oz*).
  • SA CDS 248bps*, Brazil 173bps* and Turkey 389bps*.
  • Yields: US 10yr at 4.28%*, German bund at 2.64%* and SA 10-year generic at 11.64%*, SA’s R2030 at 10.39%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 08h00: UK monthly GDP (July), industrial production (July), manufacturing production (July), trade balance (July)
  • 11h00: Eurozone industrial production (July)
  • 13h00: US MBA mortgage applications (8 September)
  • 14h30: US CPI (August)

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