In the loop 18 April 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.99/$, after closing weaker yesterday (R19.05/$*).
EM currencies were mixed yesterday; the PLN (+0.8%), BRL (+0.8%) and HUF (+0.7%) were the biggest gainers; the THB (-0.5%), PHP (-0.3%) and IDR (-0.3%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

BOE Governor Andrew Bailey noted yesterday that the UK and the Eurozone are facing less of an inflation threat than the US.
His remarks imply a rate cut by the BOE sooner than the Fed’s pending rate cutting cycle.
The BOE expects UK CPI to moderate close to the BOE’s 2% inflation target in April.
Bailey added that inflation has already declined in line with the bank’s February forecast.
His remarks follow the higher-than-expect inflation outcome for March, released yesterday.
Bailey’s comments contrast with Fed Chair Jerome Powell who this week noted that US rates might need to remain higher for longer because inflation is taking longer than expected to return to target.

The Fed’s Beige Book, released last night, highlighted the US economy as having “expanded slightly” since late February.
The Beige Book showed firms reporting greater difficulty in passing on higher costs to consumers.
The Beige Book also noted that price increases were modest, on average.
Raw materials costs were mixed; half of the Fed’s districts noted a pickup in energy prices.
The report also noted that “consumer spending barely increased overall, but reports were quite mixed across Districts and spending categories”.
It further stated that, on balance, expectations are for inflation to hold steady at a slow pace.

Cleveland Fed President Loretta Mester noted that, while monetary policy is in good shape, the Fed should not rush to cut rates.
Mester expects inflation to moderate further; however, she would want to see further evidence of inflation progressing towards the Fed’s 2% inflation target.
Fed Governor Michelle Bowman commented that progress on inflation might have stalled.
Bowman also questioned the degree to which monetary policy is restraining the US economy.

US existing homes sales, due out today, will likely have declined in March given that it surged by more than expected in February.
Existing home sales are likely to have declined by 4.1% m/m (to 4.20m) in March, following a 9.5% m/m increase in February.
The leading index is also on the cards today; expectations are for a 0.1% m/m decline in March, after having increased by 0.1% m/m in February.

Brent crude oil is currently at $87.54/bbl; ($87.29/bbl*).
Gold is at $2376/oz ($2372/oz*).
SA CDS 254bps*, Brazil 160bps* and Turkey 312bps*.
Yields: US 10yr at 4.58%*, German bund at 2.46%*, SA 10-year generic at 12.13%*, SA’s R2030 at 10.68%*.

* Denotes yesterday’s close.

Key events and data:

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