In the loop

What you should know this morning:

• The rand is weaker this morning, at R19.24/$, after closing weaker yesterday (R19.16/$*).
• EM currencies were mixed yesterday; the CLP (+1.3%), KRW (+1.0%) and PEN (+0.5%) were the biggest gainers; the COP (-0.9%), ZAR (-0.6%) and MXN (-0.6%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• Japan’s CPI eased in March, to 2.7% y/y, from 2.8% y/y in February. 
• Core CPI moderated more than expected in March, to 2.6% y/y, from 2.8% y/y in February.
• Despite this slowdown, inflation is still above the BOJ’s 2% inflation target – and has been for the past two years.
• The data provides support for the BOJ to continue normalizing policy if the trend continues. 

• BOE policymaker Megan Greene noted yesterday that the risk is tilted toward doing too little to control inflation.
• Greene’s comments come even as the UK sees weak growth that contrasts with that of the US.
• Greene added that the central bank would need to pay careful consideration in an environment where underlying inflation remains high, and growth is weak.
• She noted that rate cuts were not imminent, noting the BOE being in some sort of “trade-off territory”.
• Greene said that “doing too little is the bigger risk because you end up having to hike rates even higher in the end” – which could result in an even bigger recession.

• ECB Governing Council member Klaas Knot commented that the recent rise in oil prices would pose a less acute danger to inflation in Europe than the impact in commodities markets seen in recent years.
• Knot believes that inflation is on course to reach the central bank’s 2% inflation target.
• The ECB is largely expected to start cutting interest rates at the June MPC meeting.
• Knot noted that it would take a major upset in the incoming data to shift his current position on rates.

• Atlanta Fed President Raphael Bostic is comfortable with the Fed’s current steady interest rate policy.
• He added that he does not think that it would be appropriate to lower borrowing costs until later this year.
• He expects inflation to moderate towards the bank’s inflation target – but he noted that the path is likely to be slower than is generally expected.
• Minneapolis Fed President Neel Kashkari commented that the Fed might delay an interest rate cut into 2025.

• Eskom: loadshedding remains suspended until further notice.

• Oil prices are up this morning following reports that Israel has struck targets in Iran.
• Brent crude oil increased on concerns over the potential for a wider regional conflict which could impact crude supplies.
• Brent crude is up this morning, and up by 15.5% year-to-date.
• The gold price is down this morning, and up by 15.6% year-to-date.

• Brent crude oil is currently at $88.94/bbl; ($87.11/bbl*).
• Gold is at $2384/oz ($2388/oz*).
• SA CDS 256bps*, Brazil 161bps* and Turkey 317bps*.
• Yields: US 10yr at 4.55%*, German bund at 2.49%*, SA 10-year generic at 12.07%*, SA’s R2030 at 10.66%*.

* Denotes yesterday’s close.

Key events and data:

• 08h00: UK retail sales (March)

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