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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.
 
  • Locally, it’s a quiet day as far as data releases are concerned.
 
  • Brent crude is up this morning, and down by 2.7% year-to-date.
  • The gold price is down this morning, and up by 28.4% year-to-date.
 
  • 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:

  • 11h00: Eurozone unemployment rate (August)
  • 13h00: US MBA mortgage applications (27 September)
  • 14h15: US ADP employment change (September)
 

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