In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R17.54/$, after closing weaker yesterday (R17.58/$*).
- EM currencies were mixed yesterday; the HUF (+0.8%), PLN (+0.4%) and IDR (+0.2%) were the biggest gainers; the ZAR (-1.2%), BRL (-0.8%) and RUB (-0.8%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.
- Central bank watch: the central bank of India and New Zealand met today to decide on monetary policy.
- The Reserve Bank of India (RBI) kept the repurchase rate on hold, at 6.5%.
- The RBI noted a change in its policy stance to “neutral”, opening the door to rate cuts in the coming months.
- The Reserve Bank of New Zealand (RBNZ) cut its official cash rate by 50bps, to 4.75%, today.
- The RBNZ commented that this cut comes as policymakers have become more concerned about the economic slowdown.
- The central bank noted future changes to the policy rate as depending on the bank’s “evolving assessment of the economy”.
- The US FOMC meeting minutes of the September meeting will take centre stage today.
- Investors will watch for clues on whether the Fed will cut rates further at the 7 November FOMC meeting.
- Recall, the FOMC voted 11 to 1 to lower the Fed funds rate by 50bps, to a range of 4.75% to 5%, at the September policy meeting.
- The Fed noted at that meeting its commitment to “supporting maximum employment”, in addition to bringing inflation back to its target.
- Boston Fed President Susan Collins commented yesterday that the Fed should adopt a careful, data-dependent approach as they lower interest rates to help preserve the strength of the economy.
- Collins highlighted that recent data showed that the US labour market “is in a good place overall”.
- There is also now more confidence that inflation will return to the Fed’s 2% target in a “timely” manner.
- Fed Vice Chair Philip Jefferson commented that risks to the Fed’s employment and inflation goals are now more balanced.
- Jefferson added that “he’ll be assessing incoming economic data and the balance of risks when considering additional adjustments to the federal funds target range”.
- Locally, it’s a quiet day as far as data releases are concerned.
- Brent crude is up this morning, and up by 0.9% year-to-date.
- The gold price is up this morning, and up by 27.1% year-to-date.
- Brent crude oil is currently at $77.75/bbl; ($77.18/bbl*).
- Gold is at $2623/oz ($2609/oz*).
- SA CDS 180bps*, Brazil 148bps* and Turkey 277bps*.
- Yields: US 10yr at 4.01%*, German bund at 2.24%*, SA 10-year generic at 10.39%*, SA’s R2035 at 10.46%*.
* Denotes yesterday’s close.
Key events and data:
- 08h00: Japan machine tool orders (September)
- 13h00: US MBA mortgage applications (4 October)
- 20h00: US Fed FOMC meeting minutes (18 September)
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