In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is unchanged this morning, at R17.86/$, after closing weaker yesterday (R17.86/$*).
- EM currencies were mixed yesterday; the RUB (+0.9%), TRY (+0.5%) and PLN (+0.5%) were the biggest gainers; the THB (-1.1%), MYR (-0.9%) and CLP (-0.8%) were the biggest losers.
- Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
- Turkey’s CPI is likely to come in at 51.9% y/y in August, from 61.8% y/y in July, due to strong favourable base effects.
- On a m/m basis, CPI is likely to have increased by 2.3% in August, after having increased by 3.2% in July.
- Annual CPI is expected to continue moderating in the coming months, albeit at a slower pace.
- It is likely to dip below 50% in September and end the year close to 43%.
- Despite this expected improvement, inflation is likely to remain above the central bank’s 5% target until mid-2027.
- Growth in UK retail sales and consumer spending picked up in August.
- According to the British Retail Consortium (BRC), retail sales rose 0.8% m/m in August, after increasing by 0.3% m/m in July.
- Warm weather boosted purchases of summer clothing and food.
- BOE Deputy Governor Sarah Breeden commented that interest rates would likely remain at their 15-year highs for some time as the BOE tries to bring inflation sustainably back to the BOE’s 2% inflation target.
- Breeden noted that while inflation is moving in the right direction, the central bank’s job isn’t done yet.
- She noted that she would “approach each vote humbly and pragmatically, with no pre-determined policy path in mind”.
- The US S&P Global manufacturing PMI for August (final estimate) likely remained unchanged at 48.0, from the previous estimate, and from 49.6 in July.
- The ISM manufacturing index for August is also due out today; the index likely increased to 47.5 in August, from 46.8 in July.
- Locally, SA GDP for Q2:24 is in the spotlight today and is expected at 0.5% q/q (sa), from a contraction of 0.1% q/q (sa) in Q1:24.
- On a y/y basis, GDP growth is expected at 0.3% in Q2:24, from 0.5% in Q1:24.
- The latest economic activity data releases corroborate our long-standing expectation for an economic recovery in Q2:24.
- The swing from severe loadshedding in Q1:24 to the absence thereof throughout Q2:24 was a major support factor for this expected switch from a real GDP contraction in Q1:24 to a forecast expansion in Q2:24.
- We expect a further improvement in economic activity in H2:24, supported by improved confidence following the formation of the GNU and appointment of a new cabinet towards the end of Q2:24
- The likely durable absence of loadshedding and the likely further easing of logistical bottlenecks should support economic growth in H2:24.
- Brent crude is down this morning, and up by 0.3% year-to-date.
- The gold price is down this morning, and up by 21.0% year-to-date.
- Brent crude oil is currently at $77.24/bbl; ($77.52/bbl*).
- Gold is at $2496/oz ($2500/oz*).
- SA CDS 182bps*, Brazil 152bps* and Turkey 274bps*.
- Yields: US 10yr at 3.90%*, German bund at 2.33%*, SA 10-year generic at 10.51%*, SA’s R2030 at 9.21%*.
* Denotes yesterday’s close.
Key events and data:
- 11h30: SA GDP (Q2:24)
- 15h45: US S&P Global manufacturing PMI (August – final)
- 16h00: US ISM manufacturing (August)
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