In the loop

What you should know this morning:

• The rand is weaker this morning, at R18.86/$, after closing weaker yesterday (R18.79/$*).
• EM currencies were mixed yesterday; the ARS (+5.3%), ZAR (+1.4%) and PLN (+1.2%) were the biggest gainers; the RUB (-0.6%), TRY (-0.1%) and IDR (-0.1%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• Central bank watch: the ECB is expected to cut its benchmark interest rate by 25 bps, as the impact of US tariff policies reverberates. 
• Investors will keep an eye on ECB President Christine Lagarde’s press conference after the interest rate announcement.
• The Central Bank of the Republic of Turkey is expected to keep the one-week repo rate at 42.5%.
• The Bank of Korea kept its main interest rate steady at 2.75% today.

• US Fed Chair Jerome Powell yesterday noted that the level of the tariff increases announced by the Trump administration thus far is significantly larger than anticipated. 
• Powell therefore expects the impact to also be larger than initially expected.
• Powell anticipates that inflation with likely be higher this year, and economic growth softer.
• He added that the Fed can 'wait for greater clarity' on tariffs before cutting the Fed funds rate further.
• Powell remarked that it is the bank’s “obligation to keep longer-term inflation expectations well anchored to make certain that a one time increase in the price level does not become an ongoing inflation problem”.
• The chair also noted that the Fed may find itself in a challenging scenario in which the “dual mandate goals are in tension”.

• Cleveland Fed President Beth Hammack commented that there is good reason for Fed policymakers to hold the Fed funds rate steady until there is more clarity on how tariffs and other policy changes will affect the economy. 
• Hammack added that the risk of higher inflation, together with lower economic growth and employment, would present difficult trade-offs for policymakers.
• As such, it would be important for policymakers to keep consumers’ expectations for inflation stable.
• She noted that “when clarity is hard to come by, waiting for additional data will help inform the path ahead”.
• The Fed will meet on 7 May to decide on monetary policy.

• US housing starts and building permits for March are on the cards today.
• Both housing starts and building permits are expected to have slipped.

• Locally, it is a quiet day as far as data releases are concerned.

• Brent crude is up this morning, and down by 10.8% year-to-date.
• The gold price is up this morning, and up by 27.1% year-to-date.

• Brent crude oil is currently at $66.57/bbl; ($65.85/bbl*).
• Gold is at $3335/oz ($3327/oz*).
• SA CDS 255bps*, Brazil 199bps* and Turkey 337bps*.
• Yields: US 10yr at 4.27%*, German bund at 2.50%*, SA 10-year generic at 10.90%*, SA’s R2035 at 10.87%*.

* Denotes yesterday’s close.

Key events and data: 

• 14h15: Eurozone ECB interest rate decision – 25 bps expected
• 14h30: US housing starts (March), building permits (March), initial jobless claims (12 April)

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