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In the loop 17 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.38/$, after closing weaker yesterday (R18.36/$*).
  • EM currencies were mixed yesterday; the CLP (+0.7%), MXN (+0.5%) and PLN (+0.3%) were the biggest gainers, the COP (-1.7%), ZAR (-0.9%) and MYR (-0.3%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down. 
  • The NAHB housing market index slipped to 34 (its lowest level this year) in November, from 40 in October.
  • High mortgage rates have had a significant impact on the property market this year and have worsened affordability, keeping prospective buyers from the housing market. 
  • The report noted declines in the measures of both current and expected sales, as well as a decline in the gauge of prospective-buyer traffic.
  • Sentiment was down in three of four regions, dropping to the lowest level this year in the South and West.
  • Higher mortgage rates throughout October likely slowed the pace of building permit issuance and housing starts; the data is due out today. 
  • Housing starts are likely to have declined by 0.6% m/m, to 1,350k, in October, after having increased by 7.0% m/m (and from 1,358k) in September. 
  • Building permits are expected to have declined by 1.4% m/m in October, following a 4.5% m/m decline in September.
  • In the Eurozone, the second estimate of CPI for October will likely confirm that underlying price pressures have been subsiding. 
  • CPI is likely to have moderated to 2.9% y/y in October, from 4.3% y/y in September.
  • Such a moderation may be ascribed to the drop in energy inflation (to -11.1% y/y) in October.
  • Easing food inflation will also likely have contributed.
  • The final reading will likely support the case for the ECB to keep rates unchanged at its next policy meeting, scheduled for 14 December.
  • UK retail sales are expected to have increased by 0.4% m/m in October, after having fallen by 0.9% m/m in September.
  • Retail sales may have been hampered by the unseasonably wet weather in October. 
  • The full impact of higher interest rates is yet to play out throughout the economy. 
  • BOE Deputy Governor Dave Ramsden commented yesterday that the bank might need to keep interest rates high for an extended period.
  • He said that the MPC had previously communicated that policy would need to be sufficiently restrictive for long enough to return inflation to the 2% target sustainably in the medium term.
  • The BOE’s final MPC meeting of the year is scheduled for 14 December.
  • Eskom: Stage 3 loadshedding is currently in place until Saturday.
  • Brent crude oil is up this morning, and down by 9.8% year-to-date.
  • The gold price is up this morning, and up by 8.8% year-to-date.
  • Brent crude oil is currently at $77.46/bbl; ($77.42/bbl*).
  • Gold is at $1984/oz ($1983/oz*).
  • SA CDS 247bps*, Brazil 157bps* and Turkey 355bps*.
  • Yields: US 10yr at 4.43%*, German bund at 2.59%* and SA 10-year generic at 11.32%*, SA’s R2030 at 10.04%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 09h00: UK retail sales (October)
  • 11h00: Eurozone current account (September)
  • 12h00: Eurozone CPI (October – final)
  • 15h30: US housing starts, building permits (October)

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