In the loop 12 February 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R19.04/$, after closing weaker on Friday (R19.02/$*).
EM currencies were mixed on Friday; the BRL (+0.9%), COP (+0.7%) and HUF (+0.5%) were the biggest gainers; the CLP (-0.5%), THB (-0.3%) and TRY (-0.3%) were the biggest losers.

Japan’s Q4:23 GDP data, due out on Thursday, likely increased by 1.1% q/q, after having declined by 2.9% q/q in Q3:23.
The BOJ will keep a close eye on the data to assess whether this economy is ready for the first interest rate hike in almost two decades.
India’s CPI for January, due out today, likely moderated to 5.0% y/y, from 5.7% y/y in December.
The broader trend is for CPI to have eased to the Reserve Bank of India’s (RBI) 4% medium-term target by mid-2025.

UK inflation, wages and GDP data due out this week will likely support the BOE’s case to ease monetary policy in H1:24.
UK CPI for January is expected to have increased, albeit only slightly, on the back of an increase in energy and services prices.
An increase may prove temporary; headline CPI is on course to moderate towards the BOE’s inflation target later this year.
The BOE will also keep a close eye on wage growth figures due out this week; a continued cooling in the pace of gains is expected.
GDP for Q4:23 is expected to show a second consecutive quarterly contraction in output.
Eurozone industrial production for December is expected to have declined slightly in December due to the contraction in German output.
The Bank of Russia will meet on Friday to decide on monetary policy; rates are expected to remain on hold.

Annual revisions to the US inflation data, out last week Friday, didn’t change the disinflation narrative for 2023.
The US CPI for January is in the spotlight this week (Tuesday) and is expected to have eased to 2.9% y/y in January, from 3.4% y/y in December.
Core CPI is likely to come in at 3.7% y/y in January, from 3.9% y/y in December.
Economic data out this week will provide clues on consumer health and the labour market.
Retail sales for January, due out on Thursday, are expected to reflect subdued spending.
Downward revisions to the strong sales in December are expected.
The University of Michigan sentiment survey for February is due out on Friday; sentiment likely improved further in early February after January’s outcome hit the highest level since July 2021.
Housing starts for January are also on the cards this week as well as annual revisions to the PPI data.

Locally, mining production for December, due out tomorrow, likely increased by 5.4% y/y, from an increase of 6.8% y/y in November.
On a m/m basis, mining production likely increased by 0.3% in December, from 2.1% in November.
Retail sales for December are due out on Wednesday; sales are likely to have fallen further, by 0.4% y/y, following a decline of 0.9% in November.
Retail sales are expected to have increased by 0.2% m/m in December, from an increase of 0.4% m/m in November.
Eskom: Stage 5 loadshedding continues until further notice.

Brent crude oil is currently at $81.87/bbl; ($82.19/bbl*).
Gold is at $2023/oz ($2024/oz*).
SA CDS 236bps*, Brazil 136bps* and Turkey 310bps*.
Yields: US 10yr at 4.17%*, German bund at 2.38%* and SA 10-year generic at 11.28%*, SA’s R2030 at 9.93%*.

* Denotes Friday’s close.

Key events and data:

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