In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R16.46/$, after closing stronger yesterday (R16.50/$*).
- EM currencies were mixed yesterday; the PLN (+0.6%), HUF (+0.5%) and INR (+0.5%) were the biggest gainers; the MXN (-0.8%), BRL (-0.8%) and TWD (-0.7%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.
- Iran war: Houthi forces have launched further missile attacks on Saudi Arabia, while Saudi-led coalition forces responded with strikes on Houthi positions and infrastructure in Yemen.
- Iran yesterday reiterated calls for dialogue and signalled support for diplomatic solutions to regional conflicts.
- Gulf states remained focused on preventing further disruptions to energy markets and shipping routes.
- China's consumer inflation and factory-gate prices both increased further in September.
- CPI came in at 0.9% y/y in September, up from 0.8% y/y in August.
- PPI accelerated to 5.0% y/y in September, from 3.8% y/y in August.
- The increase suggests mounting input cost pressures that manufacturers may struggle to pass on to consumers.
- China's trade surplus widened further in September, supported by another strong rise in exports amid robust global demand for high-tech and AI-related products.
- Exports increased 36.3% y/y in September, up from 25.0% y/y in August.
- Imports rose 31.0% y/y in September, up from 28.2% y/y in August; the increase reflects higher global oil prices.
- The stronger-than-expected trade figures highlight the continued resilience of China's external sector.
- However, China's growing reliance on exports continues to heighten trade tensions with major trading partners, particularly the US and EU.
- US existing home sales rose by 1.5% m/m in September to a seasonally adjusted annual rate of 3.99 million units, from 3.93 million in August.
- Despite the m/m increase, sales were 2.2% lower than a year earlier, highlighting the continued weakness of the housing market amid elevated mortgage rates.
- Housing inventory rose to 1.60 million units, equivalent to a 4.8-month supply, providing buyers with greater choice and improving their negotiating positions.
- The median existing-home price increased by 1.3% from a year earlier to $417,500, marking the 39th consecutive month of annual price gains.
- The US September CPI report will be a key focus today.
- Headline inflation is expected to have increased to 3.6% y/y in September, from 3.4% y/y in August.
- On a m/m basis, CPI is expected to have increased by 0.6% in September, following a 0.4% increase in August.
- NY Fed President John Williams yesterday indicated that he currently sees no need for further interest rate increases in 2027.
- However, he still expects one additional rate hike before the end of this year.
- Williams expressed confidence that inflation would slow significantly over the coming year and move closer to the Fed's 2% target.
- This is despite persistent price pressures stemming from elevated energy costs, tariffs, and strong artificial intelligence-related investment.
- However, he acknowledged continued uncertainty surrounding the economic outlook and emphasised that future monetary policy decisions would remain dependent on incoming economic data.
- Richmond Fed President Tom Barkin yesterday reiterated the Fed's commitment to returning inflation to its 2% target, rejecting suggestions that the goal had become unattainable.
- Barkin cautioned that repeated supply shocks, including higher energy costs, tariffs and geopolitical disruptions, could prolong inflationary pressures and increase the risk of businesses passing higher costs on to consumers.
- His remarks reinforced concerns that persistent price pressures could complicate the Fed's efforts to restore price stability.
- Locally, it is a quiet day as far as data releases are concerned.
- Brent crude is up this morning, and up by 74.6% year-to-date.
- The gold price is steady this morning, and down by 3.7% year-to-date.
- Brent crude oil is currently at $106.33/bbl; ($105.69/bbl*).
- Gold is at $4161/oz ($4160/oz*).
- SA CDS 134bps*, Brazil 111bps* and Turkey 246bps*.
- Yields: US 10yr at 5.20%*, German bund at 3.46%*, SA 10-year generic at 8.94%*, SA's R2035 at 8.73%*.
* Denotes yesterday's close.
Key events and data:
- 13h00: US MBA mortgage applications (9 October)
- 14h30: US CPI (September)
- 20h00: US Fed Beige Book
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