In the loop 05 December 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.15/$, after closing stronger yesterday (R18.09/$*).
EM currencies were mixed yesterday; the KRW (+1.1%), RUB (+1.0%) and COP (+0.6%) were the biggest gainers; the CLP (-0.3%) and INR (-0.1%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

Central bank watch: the National Bank of Poland kept the policy rate on hold at 5.75% today, extending the pause since the last cut in October 2023.
However, the central bank is largely expected to deliver rate cuts over the course of 2025.

St. Louis Fed President Alberto Musalem noted yesterday that it might be appropriate to pause the rate cutting cycle at the December FOMC meeting.
He reiterated that the committee would assess all incoming data in making a decision.
He added that he would want to keep all options open ahead of the 17-18 meeting.
He nonetheless said that he would favour lowering interest rates over time.
Musalem highlighted the risks of cutting rates too quickly as greater than easing too little.
Fed Chair Jerome Powell noted that the Fed can “afford to be a little more cautious as we try to find neutral”.
Powell also highlighted that downside risks to the labour market appear to have receded.

The Fed’s Beige Book highlighted that US growth expectations rose “moderately” across most geographies and sectors.
Businesses expressed optimism that demand would rise in the coming months.
Several districts noted further increases in price sensitivity among consumers.

ECB President Christine Lagarde yesterday commented that the central bank’s fight against inflation is approaching its end, but “not completed”.
Lagarde noted that the economic medium-term prospects are “dominated by downside risks”.
The ECB today goes into the week-long quiet period ahead of the policy meeting next week.

The UK Decision Maker Panel (DMP) 3m and 1yr inflation expectations for November will be in focus today.
One-year ahead inflation expectations are expected to have increased to 2.6% in November, from 2.5% in October.
The 3m ahead inflation expectations likely remained unchanged, at 3.5%, in November.

Locally, the current account for Q3:24 is scheduled for release; the deficit is expected to have widened to 1.7% of GDP in Q3:24, from a 0.9% of GDP in Q2:24.
Electricity production and consumption for October are scheduled for release on Thursday.

Brent crude oil is currently at $72.33/bbl; ($72.31/bbl*).
Gold is at $2649/oz ($2651/oz*).
SA CDS 183bps*, Brazil 168bps* and Turkey 253bps*.
Yields: US 10yr at 4.18%*, German bund at 2.06%*, SA 10-year generic at 10.16%*, SA’s R2035 at 10.21%*.

* Denotes yesterday’s close.

Key events and data:

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