In the loop

What you should know this morning:

• The rand is trading at R17.17/$, after closing stronger yesterday (R17.09/$*).
• EM currencies were mixed yesterday; the ARS (+2.5%), KRW (+0.8%) and PHP (+0.7%) were the biggest gainers; the RUB (-0.8%), PLN (-0.3%) and CZK (-0.2%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down this morning.

• Central bank watch: the US Fed cut its Fed funds rate by 25 bps yesterday, as expected, in an effort to ease borrowing conditions amid growing concerns about the US labour market.
• The Fed funds rate now stands at 3.75–4%, its lowest level since late 2022.
• The decision split the 12 voting members of the FOMC. 
• Kansas City Fed President Jeff Schmid argued for keeping rates unchanged, while Fed Governor Stephen Miran, a close ally of President Trump, supported a larger 50 bps cut.
• Policymakers noted that “job gains have slowed” and that “risks to employment have risen in recent months,” while describing economic growth as “moderate”.
• Fed Chair Jerome Powell said a further rate reduction is “not a foregone conclusion”. 
• He added that, although some government data releases have been delayed, available public and private sector indicators suggest that employment and inflation have “not changed much” since the FOMC’s previous meeting.
• The Fed also announced it would end its balance sheet reduction programme in December.

• The ECB is expected to keep its benchmark interest rate unchanged today.

• Eurozone GDP, scheduled for release today, is likely to confirm modest growth in Q3:25.
• GDP is likely to come in at 0.1% q/q in Q3:25, after having increased by 0.1% q/q in Q2:25.
• Soft monthly trade data and elevated uncertainty tilt the risks to those forecasts to the downside.
• Consumer confidence (final estimate for October) is due today; the consumer confidence index improved to -14.2 (initial estimate), from -14.9 in September.
• Economic confidence is expected to have improved to 96.0 in October, from 95.5 in September.
• The unemployment rate is expected to remain unchanged, at 6.3%, in September.

• President Trump and President Xi Jinping concluded high-stake trade talks earlier this morning.
• Trump deemed the meeting “amazing”; he announced that fentanyl tariffs on China would immediately be cut to 10%, from 20%, and that China would restart purchases of US soybeans.
• He is expected to visit China again in April.
• Chinese authorities have not yet commented on the outcomes of the talks.

• Locally, the September PPI is on the cards today and is expected to come in at 2.6% y/y, after having increased by 2.1% y/y in August.
• On a m/m basis, PPI is likely to have increased by 0.2% in September, after having increased by 0.3% in August.
• The monthly Budget balance data for September is also due; the budget deficit came in at R38.3bn in August. 

• Brent crude is down this morning, and down by 13.4% year-to-date.
• The gold price is down this morning, and up by 50.8% year-to-date.

• Brent crude oil is currently at $64.62/bbl; ($64.92/bbl*).
• Gold is at $3957/oz ($3931/oz*).
• SA CDS 150bps*, Brazil 137bps* and Turkey 247bps*.
• Yields: US 10yr at 4.07%*, German bund at 2.62%*, SA 10-year generic at 8.96%*, SA’s R2035 at 8.84%*.

* Denotes yesterday’s close.

Key events and data:

• 11h30: SA PPI (September)
• 12h00: Eurozone consumer confidence (October – final), economic confidence (October), GDP (Q3:25), unemployment rate (September)
• 14h00: SA monthly budget balance (September)
• 15h15: Eurozone ECB interest rate decision – no change expected

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