In the loop 02 October 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.38/$, after closing weaker yesterday (R17.43/$*).
EM currencies were largely down yesterday; the RUB (-2.9%), THB (-1.3%) and ZAR (-1.2%) were the biggest losers; the BRL gained 0.2%.
Asian equity markets: the Nikkei is down, while the Hang Seng is up.

Central bank watch: the National Bank of Poland will meet today and is likely to keep its benchmark interest rate on hold, at 5.75%.

ECB Governing Council member Martins Kazaks has noted the ECB as likely to cut interest rates further at the policy meeting on 17 October, and beyond.
Kazaks noted risks to the economy as having become more pronounced.
He said that “the risks of still sticky domestic, especially services, inflation and too-weak growth are increasingly balanced with some tilt towards weak growth”.
Several ECB policymakers are due to speak on the economy and monetary policy later today.

Atlanta Fed President Raphael Bostic commented that the “Fed should be willing to explore more outsized rate cuts if the jobs market deteriorates”.
He indicated that the Fed would be watching the upcoming jobs data closely.
Bostic added that the Fed’s base case is for “orderly” easing of interest rates, with inflation expected to continue moderating and the US labour market to hold up.
He noted that he would support a further 50 bps rate cut, should the labour market show unexpected weakness.

The US ISM manufacturing index undershot expectations, at 47.2 in September, matching the August outcome.
The index remained in contraction for a sixth consecutive month in September.
Thirteen industries remained in contraction in September, led by printing, plastics and rubber, and wood products.
The data implies the US manufacturing sector as still struggling.

The US private sector ADP employment report for September is due out today.
Private payrolls are likely to have improved in September; a 123k increase is expected, after an increase of 99k in August.
Investors are also keeping an eye on the non-farm payrolls (NFP) for September, due out on Friday, which likely increased, by 150k, following an increase of 142k in August.

Brent crude oil is currently at $74.96/bbl; ($73.56/bbl*).
Gold is at $2649/oz ($2666/oz*).
SA CDS 178bps*, Brazil 153bps* and Turkey 271bps*.
Yields: US 10yr at 3.74%*, German bund at 2.03%*, SA 10-year generic at 10.10%*, SA’s R2035 at 10.18%*.

* Denotes yesterday’s close.

Key events and data:

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