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In the loop 11 September 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R19.00/$, after closing stronger on Friday (R19.13/$*).
  • EM currencies were largely down yesterday; the HUF (+0.4%), RUB (+0.4%) and COP (+0.4%) were the biggest gainers; the CLP (-1.3%), CNY (-0.2%) and PEN (-0.2%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Hang Seng is up. 
  • G20 Summit 2023: G20 leaders have adopted the Delhi Declaration under India's presidency following consensus among member countries. 
  • There was 100% consensus on all developmental and geopolitical issues.
  • The declaration places emphasis on strong, sustainable, balanced, and inclusive growth.
  • The declaration noted that countries “must refrain from the threat or use of force to seek territorial acquisition against the territorial integrity and sovereignty or political independence of any state”.
  • It also emphasized the protection of the vulnerable through promoting equitable growth and enhancing macroeconomic and financial stability.
  • G20 nations have applauded India’s success in reaching an agreement on a joint communique.
  • China’s CPI increased by 0.1% y/y in August, after having declined by 0.3% y/y in July.
  • PPI contracted for an 11th consecutive month in August, by 3.0% y/y, after having declined by 4.4% y/y in July.
  • While the slight increase in consumer prices may stop news headlines about deflation, demand is currently too weak to allow most retail businesses to raise prices.
  • The People’s Bank of China (PBOC) is expected to lower its one-year rate by 10 basis points this week.
  • Economic activity data out this week will likely be a mixed bag; industrial production will likely have increased, while fixed asset investment growth may have held steady.
  • Retail sales are expected to have weakened further.
  • The ECB will meet on Thursday to decide on rates; it is likely to be a close call.
  • The UK labour data is in the spotlight this week; the data will be closely monitored by the BOE as it assesses whether to hike rates further in the current cycle. 
  • The BOE is largely expected to hike its benchmark interest rate by 25 bps on 21 September.
  • The Bank of Russia will meet on Friday and is likely to keep the policy rate unchanged after August’s emergency 350 bps rate hike.
  • The US Fed is currently in a blackout period ahead of its FOMC meeting next week (19-20 September).
  • The US CPI for August is due out on Wednesday; the CPI report will likely present 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 at 0.2% m/m in August, matching July’s increase.
  • PPI for August, due out on Thursday, would have been boosted by higher energy prices in August.
  • Retail sales for August are also due out on Thursday; a moderation in consumer demand may have become apparent in the August retail sales.
  • Friday will see the release of the Empire State manufacturing survey for September; an improvement is expected.
  • Locally, manufacturing production for July, due out later today, is expected at 4.8% y/y, from a 5.5% y/y increase in June.
  • Mining production for July, due out on Thursday, likely increased by 0.9% y/y, after having increased by 1.1% y/y in June.
  • Eskom: Stage 3 loadshedding is currently in place until 4 pm; Stage 4 loadshedding will be implemented then.
  • Brent crude oil is down this morning, and up by 5.4% year-to-date.
  • The gold price is up this morning, and up by 5.6% year-to-date.
  • Brent crude oil is currently at $90.56/bbl; ($90.65/bbl*).
  • Gold is at $1926/oz ($1919/oz*).
  • SA CDS 246bps*, Brazil 170bps* and Turkey 379bps*.
  • Yields: US 10yr at 4.29%*, German bund at 2.61%* and SA 10-year generic at 11.58%*, SA’s R2030 at 10.35%*.

* Denotes Friday’s close. 

Key events and data: 

  • 08h00: Japan machine tool orders (August)
  • 11h00: SA manufacturing production (July)

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