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In the loop 12 September 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.90/$, after closing stronger yesterday (R18.86/$*).
  • EM currencies were mixed yesterday; the RUB (+2.4%), MXN (+1.4%) and ZAR (+1.4%) were the biggest gainers; the TRY (-0.1%), INR (-0.1%) and PHP (-0.1%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei, Hang Seng and Shanghai Composite are up. 
  • A New York Fed survey released yesterday noted Americans’ overall views on inflation as little changed in August.
  • Nonetheless, Americans expect price increases for rent, housing and food. 
  • Furthermore, US consumers have downgraded their views of their personal financial situations.
  • The August Consumer Sentiment Survey noted that respondents expect inflation a year from now at 3.6%, slightly up from 3.5% in July 2023. 
  • Inflation three years from now is expected at 2.8%, compared to 2.9% in July 2023.
  • Five-year inflation expectations have increased to 3%, from 2.9% this July. 
  • The US NFIB small business optimism index for August is scheduled for release today and likely slipped to 91.5, from 91.9 in July.
  • The slippage is expected as goods producers remain wary of accumulating excess inventory.
  • Sentiment may also be constrained by slower hiring plans as excess demand for labour continues dissipating.
  • The UK labour data is in the spotlight today; the ILO unemployment rate is likely to have increased to 4.3% in the three months to July, from 4.2% in the three months to June. 
  • Job vacancies have been on a downward trend since the start of this year.
  • Private sector wage gains (excluding bonuses) are expected to have remained unchanged at 8.2% y/y in the three months to July. 
  • The data will be closely monitored by the BOE as it assesses whether to hike rates further in the current cycle. 
  • The BOE expects the unemployment to stay close to 4% until early 2024, as per the bank’s August forecasts.
  • The BOE is largely expected to hike its benchmark interest rate by 25 bps on 21 September.
  • Catherine Mann, a known policy hawk, commented yesterday that she did not favour a pause in rate hikes to see if monetary policy was working.
  • Mann’s comments followed comments from three BOE policymakers, Andrew Bailey, Huw Pill and Sir Jon Cunliffe, that UK interest rates were reaching a peak and could be held there.
  • Eskom: Stage 4 loadshedding is currently in place and will continue until further notice.
  • Brent crude oil is up this morning, and up by 5.9% year-to-date.
  • The gold price is down this morning, and up by 5.3% year-to-date.
  • Brent crude oil is currently at $90.99/bbl; ($90.64/bbl*).
  • Gold is at $1921/oz ($1923/oz*).
  • SA CDS 242bps*, Brazil 171bps* and Turkey 378bps*.
  • Yields: US 10yr at 4.29%*, German bund at 2.63%* and SA 10-year generic at 11.61%*, SA’s R2030 at 10.36%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 08h00: UK ILO unemployment rate (July)
  • 11h00: Eurozone ZEW survey expectations (September)
  • 12h00: US NFIB small business optimism (August)

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