In the loop

What you should know this morning:

• The rand is stronger this morning, at R18.73/$, after closing weaker yesterday (R18.77/$*).
• EM currencies were mixed yesterday; the PEN (+0.8%), HUF (+0.4%) and RUB (+0.4%) were the biggest gainers; the KRW (-0.5%), TWD (-0.5%) and THB (-0.5%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

• Japan’s industrial production for February was revised down in the final estimate published today.
• Industrial production contracted by 0.6% m/m in February, a deeper decline than the -0.1% m/m estimated before.
• Output dropped by 3.9% y/y in February, preliminary data showed a drop of 3.4% y/y in February; this follows a decline of 1.5% y/y in output in January.

• China’s trade balance statistics for March are due out this morning.
• The trade surplus is expected to have increased from $39.71bn in February to $69.10bn in March.
• Indications are that exports held up reasonably well, compared to the high base of a year ago; exports usually rebound in March after the Lunar New Year.
• The official Chinese PMI’s new export sub-component index jumped to 51.3 during March – the highest reading in a year.

• Today sees the release of a slew of data for the UK economy, including monthly GDP, industrial and manufacturing production, and the trade balance for February.
• Monthly real GDP likely rose 0.1% m/m in February, from an increase of 0.2% m/m in January.
• The UK slipped into a technical recession in H2:23; the monthly data will be closely watched to see if it indicates a recovery in Q1:24.
• The BOE will release former Fed Chair Ben Bernanke’s report of its policy review, commissioned by the bank last year after the failure to predict the extent of the post-pandemic inflation spike.
• Bernanke’s report might include suggestions on how the BOE should communicate uncertainty around its baseline forecast and interest rate path, especially in the face of external shocks.
• BOE policymaker Megan Greene warned yesterday that cutting rates too early might lead to a situation of “stop-start” monetary policy, and ultimately higher interest rates, to get inflation to target.
• Greene believes that the UK economy is likely more constrained on the supply side than that of the US, with low productivity and worker participation.
• “Inflation persistence is therefore a greater threat for it than the US” Greene warned; “in my view, rate cuts in the UK should still be a way off as well,” she said.

• The University of Michigan will publish its preliminary sentiment indicators for April this afternoon.
• While the gauge for current conditions likely remained under pressure, expectations likely improved somewhat in April; however, inflation expectations likely remained unchanged.
• New York Fed President John Williams said that he sees a better balance in the US economy currently.
• "I expect inflation to continue its gradual return to 2%, although there will likely be bumps along the way, as we've seen in some recent inflation readings," Williams noted.

• Locally, it is a quiet day as far as data releases are concerned.
• Eskom: loadshedding remains suspended until further notice.

• Brent crude is up this morning, and up by 17.1% year-to-date.
• The gold price is up this morning, and up by 15.7% year-to-date.

• Brent crude oil is currently at $90.23/bbl; ($89.74/bbl*).
• Gold is at $2386/oz ($2350/oz*).
• SA CDS 255bps*, Brazil 148bps* and Turkey 303bps*.
• Yields: US 10yr at 4.59%*, German bund at 2.46%*, SA 10-year generic at 12.03%*, SA’s R2030 at 10.68%*.

* Denotes yesterday’s close.

Key events and data:

• 08h00: UK GDP, industrial production, manufacturing production, trade balance (February)
• 09h00: China trade balance (March)
• 14h30: US import price index, export price index (March)
• 16h00: University of Michigan sentiment, expectations, inflation expectations (April - preliminary)

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