In the loop 05 March 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.48/$, after closing stronger yesterday (R18.56/$*).
EM currencies were mixed yesterday; the BGN (+1.2%), THB (+1.0%) and CLP (+0.6%) were the biggest gainers; the MXN (-1.7%), COP (-1.2%) and TRY (-0.1%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

UK Chancellor of the Exchequer Rachel Reeves commented yesterday that a global trade war would damage UK growth.
It would also be likely to push up inflation, even if US President Trump excluded Britain from tariffs.
Reeves pledged to “make the case with all my international counterparts for free and open trade”.
Reeves warned that the UK might be “affected by slowing global trade, by a slower GDP growth, and by higher inflation than otherwise would be the case”.
Reeves is hopeful that the UK can strike a trade deal with the US.
UK BOE Governor Andrew Bailey, Chief Economist Huw Pill and other policymakers are due to comment on the economy and monetary policy today.

New York Fed President John Williams commented yesterday that he anticipates tariffs to contribute to inflation.
He noted that there is a lot of uncertainty about how the US economy might respond to President Trump's levies.
Williams added that monetary policy is in a good place and that he doesn’t see the need to lower borrowing costs at this month’s policy meeting.
He concurred with other Fed policymakers in describing policy as “modestly restrictive”.
Williams reiterated his view that expects inflation to move toward the central bank’s 2% target over time.

US President Trump, in a speech to Congress yesterday, highlighted his economic agenda.
He noted that there may be an “adjustment period” as his tariffs take effect.
He commented that “tariffs are about making America rich again and making America great again”.
President Trump argued that despite economic headwinds, the US economy’s “momentum is back”.

The US ISM services index, due for release today, is likely to have slipped in February, to 52.5, from 52.8 in January.
The colder weather and uncertainty around the Trump Administration policies are likely to have weighed on the services index.
The Fed’s Beige Book, also on the cards today, will likely highlight a surge in consumer and business sentiment.
The ADP private employment report for February is scheduled for release; employment is likely to have increased by 140k in February, after having increased by 183k in January.
The ADP report comes ahead of the non-farm payrolls (NFP) for February out on Friday.
NFP are expected to have increased, by 160k, following an increase of 143k in January.

Locally, the BER releases the Q1:25 business confidence data today; the index improved to 45 in Q4:24 (the highest level since Q1:22), from 38 in Q3:24.
An improvement in consumer demand lifted sentiment among businesses in Q4:24.

Brent crude oil is currently at $70.86/bbl; ($71.04/bbl*).
Gold is at $2910/oz ($2911/oz*).
SA CDS 201bps*, Brazil 185bps* and Turkey 259bps*.
Yields: US 10yr at 4.24%*, German bund at 2.49%*, SA 10-year generic at 10.42%*, SA’s R2035 at 10.42%*.

* Denotes yesterday’s close.

Key events and data:

09h15: SA S&P Global industry-wide PMI (February)
11h00: Eurozone HCOB services and composite PMI (February – final)
11h30: UK S&P Global services and composite PMI (February – final)
12h00: SA BER business confidence index (Q1:25)
12h00: Eurozone PPI (January)
14h00: US MBA mortgage applications (28 February)
15h15: US ADP employment report (February)
16h45: US S&P Global services and composite PMI (February – final)
17h00: US factory orders (January), durable goods orders (January – final), ISM services index (February)
21h00: US Fed Beige Book

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