In the loop

What you should know this morning:

• The rand is stronger this morning, at R18.44/$, after closing stronger yesterday (R18.46/$*).
• EM currencies were mixed yesterday; the RUB (+1.3%), COP (+1.0%) and CLP (+0.9%) were the biggest gainers; the THB (-0.6%), BGN (-0.4%) and RON (-0.4%) 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 Reserve Bank of India cut its key rate by 25 bps, to 6.25%, today.

• The UK Decision Maker Panel (DMP) survey noted that three-month ahead inflation expectations came in at 3.9% in January, up from 3.8% in December.
• The one-year ahead inflation expectations remained unchanged at 3.0% in January.
• The survey results noted that more than 50% of firms survey expect to cut staff.
• Around 38% of firms expect to lower employee wages; two-thirds of respondents expect to lower their profit margins.

• Dallas Fed President Lorie Logan noted yesterday that interest rates may already be near a neutral level.
• She added that there may not be a need for further cuts even if inflation continues to moderate. 
• Logan added that the Fed would likely lower rates if the labour market deteriorated.

• Non-farm payrolls (NFP) for January, in the spotlight today, are expected to slip to 170k, following an increase of 256k in December.
• The unemployment rate is likely to have remained unchanged at 4.1% in January.
• The University of Michigan’s consumer sentiment index for January is likely to have improved, based on how consumers spent towards the end of the year.
• Both the 1 yr and 5-10 yr inflation expectations are expected to have remained unchanged in February, at 3.3% and 3.2%, respectively.

• Locally, President Cyril Ramaphosa highlighted in his State of the Nation (SONA), the first under the GNU, that SA has built durable institutions that supports our democracy and supports the well-being of South Africans. 
• The GNU has adopted the Medium-Term Development Plan that sets out the 3 strategic priorities over the next 5 years.
• These are: inclusive economic growth, reduction of poverty, and building a capable state.
• The government will work with municipalities to ensure that the water issues and other constraints are addressed; trading services such as water and power will be ringfenced.
• To achieve high levels of economic growth, of above 3%, government is engaging investors to unlock R100bn for investment for infrastructure.
• Government has pledged to spend over R940bn on infrastructure over the next three years.
• Economic reforms through Operation Vulindlela (OV) had created a new sense of optimism in the economy.
• The reform program has made progress in rebuilding and restructuring our network industries; investment opportunities are opening up, leading to investment.
• Over the coming year, a second wave of reform will be unleashed.
• Government is working towards repositioning SOEs to ensure that they can fulfil their social and economic mandates through a dedicated SOE reform unit. 
• SA remains on a positive trajectory with regard to loadshedding; he added that SA needs to put this risk behind us by completing the reform of our energy system to ensure stable electricity supply. 
• This year government will put in place the building blocks for a competitive energy supply system; the electricity minister is expected to address these issues in the coming week.  
• A fully digital visa application system will be implemented to boost tourism and reduce the scope of corruption.
• SA is on track to implement a new mining rights system this year.
• Government is prioritizing improving the health care system in SA.

• The SARB’s gross and net reserves for January are scheduled for release today. 
• Gross reserves came in at $65.46bn in December, while net reserves are at $60.37bn in December.
• Net reserves are likely to have increased to $61.1bn in January.

• Brent crude is up this morning, and up by 0.04% year-to-date.
• The gold price is up this morning, and up by 9.3% year-to-date.

• Brent crude oil is currently at $74.67/bbl; ($74.29/bbl*).
• Gold is at $2867/oz ($2852/oz*).
• SA CDS 201bps*, Brazil 174bps* and Turkey 253bps*.
• Yields: US 10yr at 4.41=3%*, German bund at 2.37%*, SA 10-year generic at 10.39%*, SA’s R2035 at 10.41%*.

* Denotes yesterday’s close. 

Key events and data:

• 08h00: SA gross and net reserves (January)
• 15h30: US non-farm payrolls (NFP) (January), unemployment rate (January)
• 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (February)
• 22h00: US consumer credit (December)

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