In the loop 16 October 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.62/$, after closing weaker yesterday (R17.66/$*).
EM currencies were mixed yesterday; the TRY (+0.1%), HUF (+0.1%) and ARS (+0.1%) were the biggest gainers; the MXN (-1.6%), CLP (-1.5%) and RUB (-1.4%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

Central bank watch: the Bank of Thailand will meet today and is expected to hold its benchmark interest rate unchanged, at 2.50%.
The central bank considers the current policy rate to be at a neutral level.
The Monetary Authority of Singapore is also expected to keep policy unchanged today.
Bank Indonesia is largely expected to keep its policy rate at 6.00%.

UK CPI is likely scheduled for release today and is expected to come in at 1.9% y/y in September, from 2.2% y/y in August.
Fuel prices are likely to have pushed headline inflation down in September.
Core CPI is expected at 3.4% y/y in September, from 3.6% y/y in August.
Services inflation is expected to have moderated in September.
The data will likely support the case for the BOE to trim rates further when meeting on 7 November.

San Francisco Fed President Mary Daly commented yesterday that the Fed must remain vigilant as inflation declines and the labour market cools.
Daly is confident that Fed policymakers could keep the current economic expansion on track.
She added that the US labour market was close to pre-pandemic levels and was “no longer a source of major inflationary pressures”.
Daly believes that the Fed’s inflation and employment goals are now balanced.
Daly noted that the 50 bps rate cut in September was a “recalibration” of policy as inflation moderates.

Locally, the SARB’s Monetary Policy Review highlighted that “policy is still moderately restrictive”.
Governor Lesetja Kganyago noted that “while disinflation is on track, uncertainty remains”.
The SARB sees future policy moves to be guided by incoming economic data.
The bank also noted that recent rand appreciation has supported the disinflation process, which had previously “been driven by a moderately restrictive monetary policy stance”.
The MPR signalled the SARB as confident on the outlook for inflation and economic growth.
The review also signalled a further 25 bps rate cut as on the cards this year (at the November MPC meeting).

Retail sales for August are due out today and are expected to have increased by 2.3% y/y, following 2.0% y/y in July.
Retail sales were down by 0.2% m/m in July.

Brent crude oil is currently at $74.47/bbl; ($74.25/bbl*).
Gold is at $2666/oz ($2661/oz*).
SA CDS 179bps*, Brazil 152bps* and Turkey 265bps*.
Yields: US 10yr at 4.03%*, German bund at 2.22%*, SA 10-year generic at 10.40%*, SA’s R2035 at 10.47%*.

* Denotes yesterday’s close.

Key events and data:

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