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In the loop 26 November 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.10/$, after closing stronger yesterday (R18.05/$*).
  • EM currencies were mixed yesterday; the PLN (+1.1%), HUF (+1.1%) and CLP (+0.9%) were the biggest gainers; the ARS (-0.2%), THB (-0.2%) and THB (-0.1%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
 
  • Central bank watch: the Central Bank of Nigeria is set to hike rates by 50 bps, to 27.75%, to contain inflationary pressures.
  • CPI increased to 33.9% y/y in October, which may support the case for the central bank to hike rates today.
 
  • ECB Chief Economist Philip Lane commented yesterday that the central bank must be open-minded when it reduces interest rates.
  • He added that the ECB must act step by step as it cuts rates amid a barrage of risks that include wars and shifts in global politics.
  • Lane stressed that the “speed and scale of adjustments is in fact a valuable strategy across various environments, as different situations may necessitate distinct approaches”.
  • ECB Governing Council member Mario Centeno remarked that he favours a steady lowering of borrowing costs, to 2%.
  • Centeno also commented that acting gradually, and not rushing with rate cuts, would be optimal.
  • Markets are leaning towards a 25 bps rate cut at the December policy meeting.
 
  • Minneapolis Fed President Neel Kashkari noted that it is still appropriate to consider another interest rate cut at the Fed’s December FOMC meeting.
  • Kashkari noted that the economy’s resilience in the face of higher interest rates suggests that the neutral rate may be higher now.
  • Several Fed policymakers have signalled support for a more gradual pace of rate reductions.
  • The Fed will meet on 17-18 December to decide on rates.
 
  • The US Conference Board consumer confidence index for November, due out today, likely improved to 111.4, from 108.7 in October.
  • US new homes sales for October are also due out today; a decline is expected in October, following September’s surge as mortgage rates rose last month.
  • The S&P CoreLogic house price index is expected to have increased by 4.7% y/y in September, following a 5.2% y/y increase in August.
  • The FHFA house price index is expected to have increased by 0.3% m/m in September, after having increased by 0.3% m/m in August.
  • Investors will keep an eye on the US FOMC meeting minutes of the 6-7 November policy meeting.
  • Policymakers cut the Fed funds rate by 25 bps in a move widely expected.
 
  • Locally, the SARB’s leading indicator for September is scheduled for release today; the index slipped to 112.8 in August. 
 
  • Brent crude is up this morning, and down by 4.9% year-to-date.
  • The gold price is down this morning, and up by 27.1% year-to-date.
 
  • Brent crude oil is currently at $73.24/bbl; ($73.01/bbl*).
  • Gold is at $2622/oz ($2627/oz*).
  • SA CDS 185bps*, Brazil 153bps* and Turkey 257bps*.
  • Yields: US 10yr at 4.27%*, German bund at 2.21%*, SA 10-year generic at 10.09%*, SA’s R2035 at 10.13%*.
 

* Denotes yesterday’s close. 

Key events and data:

  • 09h00: SA SARB leading indicator
  • 16h00: US FHFA house price index (September), S&P CoreLogic house price index (September)
  • 17h00: US new home sales (October), Conference Board consumer confidence index (November)
  • 21h00: US FOMC meeting minutes (6-7 November)
 

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