In the loop 09 September 2024

In the loop

Christelle Grobler

What you should know this morning:

The rand is trading at R17.84/$ this morning, after closing weaker on Friday (R17.85/$*).
EM currencies were mixed on Friday; the RUB (-2.4%), ZAR (-0.7%) and BRL (-0.5%) lost the most; the PHP (+0.6%), TWD (+0.4%) and THB (+0.4%) gained the most.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

China’s inflation for August came in lower than expected.
Producer prices sunk further into deflation, with PPI recording -1.8% y/y in August, down from -0.8% y/y in July.
Factory-gate prices have been declining in y/y terms since October 2022.
CPI inflation rose 0.6% y/y in August, up slightly from 0.5% y/y in July but lower than market expectations for a 0.7% y/y increase.
Food prices were higher, mostly as a result of heavy rainfall pushing up fresh vegetable prices during August.
Core CPI increased only 0.3% y/y in August – the weakest in over three years.
The data points to lingering weakness in demand and the risk of deflation becoming entrenched.

Japan’s real GDP grew 0.7% q/q (final estimate) in Q2:24, slightly weaker than the previous estimate of 0.8% q/q growth.
The data confirmed the rebound in the economy in Q2:24, from a contraction of 0.6% q/q in Q1:24.
In annual terms, real GDP was 2.9% higher in Q2:24 (previous estimate at 3.1% y/y), from -2.4% in Q1:24.
Japan’s current account surplus rose to ¥3.19tn in July, up from ¥1.53tn in June.
The trade balance registered a deficit of ¥482.7bn in July, from a surplus of ¥556.3bn in June.

US CPI inflation data for August is due out on Wednesday.
CPI inflation is expected to have decelerated to 2.6% y/y in August, from 2.9% y/y in July.
In m/m terms, CPI inflation likely remained at 0.2% in August, in line with July’s reading.
The Fed is widely expected to start cutting interest rates at the upcoming meeting next week (17-18 September), with deliberations now focused on the magnitude of the interest rate cut.
Commenting on the jobs data published on Friday, Fed Governor Christopher Waller said that he expects rate cuts to be “done carefully”.
“If the data suggests the need for larger cuts, then I will support that,” he, however, added.
The ECB will meet on Thursday and is expected to deliver another 25 bps cut.

Locally, this week sees the release of manufacturing and mining production data for July.
Production in both sectors likely improved somewhat in July, after declining in June.
Manufacturing production, due tomorrow, is expected to have increased 1.2% m/m and 0.9% y/y in July.
Mining production, due out on Thursday, likely rose 1.3% y/y in July, following a contraction of 3.5% in June.

Brent crude oil is currently at $71.96/bbl; ($71.06/bbl*).
Gold is at $2497/oz ($2497/oz*).
SA CDS 186bps*, Brazil 157bps* and Turkey 271bps*.
Yields: US 10yr at 3.71%*, German bund at 2.17%*, SA 10-year generic at 10.29%*, SA’s R2030 at 8.96%*.

* Denotes Friday’s close.

Key events and data:

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