In the loop

What you should know this morning:

• The rand is trading at R17.50/$ this morning, after closing stronger yesterday (R17.53/$*).
• EM currencies were mixed yesterday; the BRL (+1.5%), MXN (+0.9%) and CLP (+0.8%) gained the most; the RUB (-0.9%), PHP (-0.4%) and ARS (-0.2%) lost the most.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up this morning.

• China’s Caixin services PMI picked up more than expected in October.
• The Caixin services PMI rose to 52.0 in October, from 50.3 in September; this is the highest reading since July, outstripping expectations for an increase to 50.5.
• Manufacturing activity recovered in October, with the Caixin manufacturing PMI rising to 50.3 – signalling expansion – up from 49.3 in September.
• The improvement in manufacturing activity came on a notable uptick in new orders.
• The composite Caixin PMI improved to 51.9 in October, from 50.3 in September.
• Monetary stimulus measures announced from late-September into last month likely shored up consumer demand.
• Chinese Premier Li Qiang, officially responsible for economic policy, said earlier today that they “are fully confident in the realisation of this year's goals”.
• The Premier suggested that stimulus measures have been “well received” and hinted at more to come; "in the face of downward economic pressure, we have the requirements for increasing counter-cyclical adjustments," he said.
• Chinese authorities are widely expected announce the approval of a long-awaited fiscal stimulus package later this week, after the US election.
• This would be the largest fiscal package since the pandemic as the government tries to boost confidence in the Chinese economy.
• Several measures to resolve debt, which is weighing on local governments and economic growth in general, are expected.
• Policies would likely be aimed at stabilising the real-estate market and boosting domestic demand.

• US factory orders declined by 0.5% m/m in September, after having fallen by a downwardly revised 0.8% m/m in August.
• Factory orders, excluding transport equipment, rose by 0.1% m/m in September, after declining by 0.2% m/m in August.
• The US presidential election is in the spotlight today.
• Recent polls indicate that the US presidential race between Kamala Harris and Donald Trump is going to go down to the wire.
• With the result likely coming down to votes in key highly-contested swing states, in which outcomes might be challenged, it is likely that the final outcome will only be known after some time.
• The Fed is expected to look beyond the election uncertainty and cut the Fed funds rate by 25 bps when it meets on Thursday.

• The Reserve Bank of Australia (RBA) held its key interest rate at a 13-year high earlier today, as expected.
• Underlying inflation is seen to have remained too sticky; the bank expects that it will take time for inflation to settle sustainably in their target range and approach the target midpoint.
• The RBA highlighted the “high level of uncertainty” about the global outlook and stated that it isn’t “ruling anything in or out” regarding future policy decisions.

• Locally, today sees the release of the industry-wide SA S&P Global PMI for October.
• In September, the industry-wide PMI increased to 51.0, from 50.5 in August.

• Brent crude is up this morning, and down by 2.4% year-to-date.
• The gold price is down this morning, and up by 32.6% year-to-date.

• Brent crude oil is currently at $75.18/bbl; ($75.08/bbl*).
• Gold is at $2736/oz ($2738/oz*).
• SA CDS 192bps*, Brazil 167bps* and Turkey 268bps*.
• Yields: US 10yr at 4.29%*, German bund at 2.40%*, SA 10-year generic at 10.51%*, SA’s R2035 at 10.57%*.

* Denotes yesterday’s close.

Key events and data:

• 09h15: SA S&P Global industry-wide PMI (October)
• 11h30: UK S&P Global services and composite PMI (October – final)
• 15h30: US trade balance (September)
• 17h00: US ISM services index (October)

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