In the loop 10 October 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.62/$, after closing weaker yesterday (R17.65/$*).
EM currencies were mixed yesterday; the THB (+0.2%), IDR (+0.2%) and MYR (+0.2%) were the biggest gainers; the BRL (-1.1%), PEN (-0.6%) and CZK (-0.4%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

The minutes of the US FOMC meeting of 18 September showed that the debate around the size of the 50bps rate cut was quite robust.
Some policymakers preferred a smaller 25bps rate cut, as this would be in line with a gradual path of policy normalization.
They indicated that this would have given policymakers “more time to assess the degree of policy restrictiveness as the economy evolved”.
While there was a preference to cut rates at a more gradual pace, the minutes highlighted that a “substantial majority” supported the 50bps move.
Governor Michelle Bowman was the only dissenting vote against a 50bps rate cut.
Fed Chair Jerome Powell described the move as a recalibration aimed at making sure that the US labour market remained strong.
Investors expect further rate cuts by the Fed at the last two remaining FOMC meetings this year.

Fed Vice Chair President Philip Jefferson commented yesterday that the risks to the Fed’s mandate remains roughly in balance.
He added that the underlying inflation trend shows that inflation should moderate towards the bank’s 2% target.
Boston Fed President Susan Collins also expressed confidence that inflation should continue to ease.
Collins expects more interest rate cuts in the coming months.
San Francisco Fed President Mary Daly expects two more rate cuts from the Fed this year.

The US September CPI is in the spotlight today and is likely to come in at 2.3% y/y, from 2.5% y/y in August.
On a m/m basis, headline CPI is likely to have increased by 0.1% in September, after having increased by 0.2% m/m in August.
The Fed next will meet on 7 November to decide on interest rates.

Locally, mining production for August is due out today and likely declined by 1.3% y/y, after having declined by 1.4% y/y in July.
Mining production declined by 0.9% m/m in July.
Manufacturing production for August is expected to have increased by 0.1% y/y, after having increased by 1.7% y/y in July.
On a m/m basis, manufacturing production is likely to have increased by 0.2% in August, following a 2.1% increase in July.

Brent crude oil is currently at $77.18/bbl; ($76.58/bbl*).
Gold is at $2613/oz ($2608/oz*).
SA CDS 177bps*, Brazil 148bps* and Turkey 271bps*.
Yields: US 10yr at 4.06%*, German bund at 2.25%*, SA 10-year generic at 10.35%*, SA’s R2035 at 10.42%*.

* Denotes yesterday’s close.

Key events and data:

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