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In the loop 03 April 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.78/$, after closing stronger yesterday (R18.76/$*).
  • EM currencies were mixed yesterday; the ZAR (+1.1%), CLP (+1.0%) and COP (+0.9%) were the biggest gainers; the THB (-0.6%), MYR (-0.5%) and TWD (-0.3%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
  • China’s Caixin services PMI increased to 52.7 in March, from 52.5 in February. 
  • The composite PMI for March also increased to 52.7, from 52.5 in February.
  • Business activity and total new orders improved for a 15th consecutive month; exports also continued to grow in March.
  • The Eurozone CPI for March likely moderated to 2.5% y/y, from an increase of 2.6% y/y in February.
  • The moderation is expected on the back of lower food prices in March.
  • Non-energy industrial goods inflation is also expected to have moderated in March.
  • However, CPI is expected to have increased by 0.9% m/m in March, from a 0.6% m/m increase in February.
  • Core CPI is likely to have moderated to 3.0% y/y in March, from 3.1% y/y in February.
  • The Eurozone unemployment rate for February is likely to have remained unchanged, at 6.4%.
  • The Turkish CPI for March is due out today; another surge in inflation is expected, despite a rise in interest rates by 4,150 bps.
  • CPI is likely to come in at 69.0% y/y in March, from 67.1% y/y in February; inflation is on track to reach mid-70% by May.
  • Inflation is expected to moderate thereafter; the Turkish central bank expects inflation to end the year at around 36%.
  • Fed policymakers Mary Daly and Loretta Mester expect the central bank to cut rates three times this year.
  • Both policymakers noted no need to rush to cut rates.
  • Daly indicated that three interest rate cuts would be a “reasonable baseline”.
  • Mester noted that “it’s a close call” on whether fewer cuts would be needed.
  • The US private sector ADP employment report, the precursor to the non-farm payrolls (NFP) report, is scheduled for release tomorrow.
  • Private payrolls are expected to have increased by 150k in March, following an increase of 140k in February.
  • The NFP for March, scheduled for release on Friday, are also expected to have slowed, to 214k, following an increase of 275k in February.
  • The unemployment rate is likely to have improved to 3.8% in March, from 3.9% in February. 
  • The US ISM service index is likely to have increased to 52.8 in March, from 52.6 in February.
  • The increase is expected on the back of increased interest for online services.
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Eskom: loadshedding has been suspended until further notice.
  • Brent crude is up this morning, and up by 15.5% year-to-date.
  • The gold price is up this morning, and up by 10.7% year-to-date.
  • Brent crude oil is currently at $89.01/bbl; ($88.92/bbl*).
  • Gold is at $2284/oz ($2260/oz*).
  • SA CDS 265bps*, Brazil 144bps* and Turkey 305bps*.
  • Yields: US 10yr at 4.34%*, German bund at 2.40%*, SA 10-year generic at 11.99%*, SA’s R2030 at 10.61%*.

* Denotes yesterday’s close.

Key events and data:

  • 09h00: Turkey CPI, PPI (March)
  • 11h00: Eurozone CPI (March), unemployment rate (March)
  • 13h00: US MBA mortgage applications (29 March)
  • 14h15: US ADP employment change (March)
  • 15h45: US S&P Global services and composite PMI (March – final)
  • 16h00: US ISM service index (March)

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