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In the loop 08 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.35/$, after closing weaker yesterday (R18.38/$*).
  • EM currencies were mixed yesterday; the RUB (+0.4%), MXN (+0.2%) and BRL (+0.2%) were the biggest gainers, the CZK (-1.1%), COP (-0.9%) and KRW (-0.8%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up. 
  • Several Fed policymakers commented yesterday that they are still trying to assess whether the rise in long-term Treasury yields would help cool the economy enough to curtail the need for further interest rate hikes.
  • Some of the hawkish policymakers signalled that the cumulative tightening of financial conditions since July could still have a sufficiently dampening effect on the economy. 
  • They noted, however, that they need more time to see if such cooling would last.
  • Governor Michelle Bowman noted that it was too soon to know what the full effects of the recent rise would be.
  • Bowman noted that the Fed might need to raise interest rates higher to contain inflation.
  • She noted, however, that the rise in Treasury yields since September has led to tighter financial conditions.
  • Dallas Fed President Lorie Logan commented that, while progress had been made with respect to inflation, it is still too high.
  • The US trade deficit widened by more than expected in September, to $61.5bn, from a revised $58.7bn in August.
  • The widening reflects the resilience of American demand for foreign goods.
  • Imports rose to a highest since February; exports increased to a more than one-year high.
  • The National Bank of Poland (NBP) today is likely to cut the reference rate by 25 bps, to 5.50%, after a similar reduction in October.
  • The cut in rates is expected on the back of moderating inflation.
  • Poland’s CPI is expected to moderate to 5.1% by December 2023, from 6.5% currently. 
  • It is, nonetheless, well above the NBP’s 2.5% target, a level which inflation is unlikely to reach before 2025.
  • Eurozone finance ministers are scheduled to meet in Brussels today to discuss fiscal policy in the region.
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Eskom: daytime loadshedding has been suspended; Stage 2 loadshedding will be implemented at 4pm today.
  • Brent crude oil is down this morning, and down by 5.1% year-to-date.
  • The gold price is up this morning, and up by 7.8% year-to-date.
  • Brent crude oil is currently at $81.56/bbl; ($81.61/bbl*).
  • Gold is at $1966/oz ($1964/oz*).
  • SA CDS 266bps*, Brazil 168bps* and Turkey 379bps*.
  • Yields: US 10yr at 4.56%*, German bund at 2.65%* and SA 10-year generic at 11.65%*, SA’s R2030 at 10.38%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 12h00: Eurozone retail sales (September)
  • 14h00: US MBA mortgage applications (3 November)

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