In the loop 10 January 2025

In the loop

Christelle Grobler

What you should know this morning:

The rand is unchanged at R18.94/$ this morning, after closing weaker yesterday (R18.94/$*).
EM currencies were mixed yesterday; the RUB (+1.7%), BRL (+1.2%) and PEN (+0.3%) gained the most; the CLP (-0.6%), MXN (-0.5%) and TWD (-0.2%) lost the most.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Japan’s household spending declined less than expected in November.
Real household spending contracted by 0.4% y/y in November, after falling 1.3% y/y in October.
Households cut back on spending on durable goods and clothing the most.
This is the fourth month that households have been cutting spending as higher inflation dampens purchasing power.
The fragility in household spending might keep the BOJ wary of increasing interest rates further; the next BOJ meeting will conclude on 24 January.
Japan’s leading indicator dipped to 107.0 in November, down from 109.1 in October.

The US labour market is in the spotlight today, with non-farm payrolls data due out this afternoon.
The change in non-farm payrolls is expected to have slowed to 165k in December, from 227k in November.
Average hourly earnings are expected to have increased 0.3% m/m in December, a slight slowdown from November’s 0.4% m/m.
In annual terms, average hourly earnings were likely flat, at 4.0%, in December.
The unemployment rate is expected to have remained at 4.2% in December.
Job cuts announced by US companies last year were up 5.5% on 2023’s level, according to data released by Challenger yesterday.

Fed Governor Michelle Bowman sees lingering inflation risks keeping the Fed treading carefully on the path of further rate cuts.
“I continue to prefer a cautious and gradual approach to adjusting policy”, said Bowman.
She warns that the Fed’s current policy stance “may not be as restrictive as others may see it”.
“Given the ongoing strength in the economy, it seems unlikely that the overall level of interest rates and borrowing costs are providing meaningful restraint”, Bowman argued.
Bowman also mentioned that policymakers should avoid prejudging the incoming administration’s future policies.
“Instead, we should wait for more clarity and then seek to understand the effects on economic activity, the labor market and inflation,” she said.

Brent crude oil is currently at $77.31/bbl; ($76.92/bbl*).
Gold is at $2674/oz ($2666/oz*).
SA CDS 196bps*, Brazil 191bps* and Turkey 266bps*.
Yields: US 10yr at 4.69%*, German bund at 2.57%*, SA 10-year generic at 10.45%*, SA’s R2035 at 10.49%*.

* Denotes yesterday’s close.

Key events and data:

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