In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.41/$, after closing weaker yesterday (R16.42/$*).
• EM currencies were mixed yesterday; the THB (+0.5%), TWD (+0.3%) and ARS (+0.2%) were the biggest gainers; the RUB (-1.1%), HUF (-0.8%) and PLN (-0.4%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• Iran war: yesterday saw tentative progress towards a de-escalation in the Iran war, even as the risks remained elevated.
• The two-week ceasefire between the US and Iran largely held, while diplomatic efforts intensified.
• This was led by Pakistani mediation, to secure a second round of talks aimed at converting the truce into a more durable agreement.

• ECB Governing Council member Olli Rehn said yesterday that the ECB should take time to fully assess the economic fallout from the Iran war before making policy moves. 
• He stressed that, in a period of heightened uncertainty, monetary policy must be guided by a steady hand and factor in how long the conflict may last and the extent of the damage it causes. 
• Rehn added that the ECB would remain calm in deciding the future interest rate path.
• He emphasised that no interest rate decisions have been predetermined. 
• With the ECB set to meet in two weeks, policymakers are currently leaning towards leaving rates unchanged at 2%. 
• While rising energy prices have added to inflation pressures, ongoing negotiations mean that there is still scope to avoid broader spillovers into wages and widespread price increases.

• ECB Governing Council member Martins Kazaks yesterday commented that the the ECB cannot yet rule out an interest rate increase at its 30 April meeting.
• However, the ECB has acknowledged that there has so far been no clear evidence of significant second-round inflation effects from the recent energy price surge triggered by the Iran war.
• Kazaks stressed that “every meeting is a live meeting” and cautioned against providing calendar-based forward guidance, noting that conditions could still change in the coming weeks.
• He emphasised that the ECB must remain vigilant, as energy prices remain volatile and inflation expectations could become more fragile if firms and workers respond more quickly to price shocks than in the past.
• Kazaks also said the absence of second-round effects so far should not leave the ECB complacent.
• He warned that a faster price-wage spiral remains a risk, and he described market expectations for a rate hike later in the year, starting around mid-2026, as “reasonable”.

• ECB Chief Economist Philip Lane noted that the Eurozone remains on a broadly stable path.
• However, but policymakers must stay alert to risks from global uncertainty and geopolitical tensions. 
• He indicated that inflation is continuing to move towards the ECB's 2% target, supported by easing wage and services price pressures. 
• Lane added that current interest rate settings are broadly appropriate for the baseline outlook. 
• Lane further stressed that the ECB is not locked into any preset path, and that it would adjust policy if incoming data showed either weaker growth, lower inflation, or renewed upside price pressures. 
• His remarks reinforced that rates could remain steady, for now, with flexibility if conditions changed materially.

• Attention today will also turn to the release of the Eurozone's trade balance for February.
• The figures are expected to show that higher US tariffs continue to weigh on exports from the Eurozone.

• ECB policymaker Alan Taylor noted that he had voted to keep rates unchanged at the March meeting in order to give policymakers more time to evaluate the effects of the Iran war.
• He noted that monetary conditions are already restrictive, and added that the BOE faces a key decision point at its next meeting. 
• Taylor added that he would be watching wage settlements closely to determine whether inflationary pressures from the conflict are beginning to generate second-round effects in the UK economy.

• Locally, it's a quiet day as far as data releases are concerned.

• Brent crude is down this morning, and up by 61.4% year-to-date.
• The gold price is up this morning, and up by 11.2% year-to-date.

• Brent crude oil is currently at $98.08/bbl; ($99.39/bbl*).
• Gold is at $4802/oz ($4790/oz*).
• SA CDS 151bps*, Brazil 128bps* and Turkey 238bps*.
• Yields: US 10yr at 4.31%*, German bund at 3.03%*, SA 10-year generic at 8.61%*, SA's R2035 at 8.44%*.

* Denotes yesterday's close.

Key events and data:

• 10h00: Eurozone current account balance (February)
• 11h00: Eurozone trade balance (February)

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