In the loop
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)