In the loop 14 January 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.99/$, after closing stronger yesterday (R19.05/$*).
EM currencies were mixed yesterday; the COP (+0.9%), CLP (+0.5%) and ZAR (+0.3%) were the biggest gainers; the CZK (-1.2%), RUB (-1.0%) and INR (-0.9%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

A New York Fed inflation expectations survey yesterday showed that US consumers see inflation as higher over the next few years than was envisaged previously.
The survey results add to mounting concerns about inflation after the presidential elections late last year.
Inflation expectation for three years ahead increased to 3% in December, from 2.6% in November.
Inflation expectations over the next year was unchanged at 3% in December, while expected inflation five years ahead declined to 2.7% in December, from 2.9% in November.
The US December CPI will be in focus on Wednesday and is likely to come in higher, at 2.9% y/y, from 2.7% y/y in November.

The US NFIB small business optimism index for December, due out today, is likely to have increased, to 102.1, from 101.7 in November.
Optimism soared in November to the highest levels since June 2021.
The NFIB December job’s report noted a net 19% of small business owners plan to create new jobs over the next three months.
Headline producer price growth likely accelerated to 3.5% y/y in December, from 3.0% y/y in November.
On a m/m basis, PPI is expected to have increased by 0.4% in December, matching November’s increase.

ECB Governing Council member Olli Rehn commented that he expects interest rates to reach neutral territory by mid-2025, with cuts potentially starting by mid-summer.
He added that disinflation is well on track; wage pressures have also receded.
However, Rehn noted that the growth outlook has weakened.
He reiterated that the pace of interest rate cuts would depend on incoming data regarding three factors, being “the inflation outlook, the underlying inflation dynamics and monetary policy transmission”.
Rehn also said that ECB policymakers would have more information on the “policies of the incoming US administration and on the European response to those policies” at forthcoming meetings.

Oil prices climbed to a four-month high yesterday on expectations that the wider US sanctions on Russian oil would force buyers in India and China to source alternative suppliers.
The US imposed wider sanctions on Russian oil producers last week.
Brent crude is down this morning, and up by 7.9% year-to-date.
The gold price is up this morning, and up by 1.8% year-to-date.

Brent crude oil is currently at $80.49/bbl; ($81.01/bbl*).
Gold is at $2671/oz ($2660/oz*).
SA CDS 205bps*, Brazil 198bps* and Turkey 278bps*.
Yields: US 10yr at 4.77%*, German bund at 2.61%*, SA 10-year generic at 10.66%*, SA’s R2035 at 10.69%*.

* Denotes yesterday’s close.

Key events and data:

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