In the loop 13 May 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.23/$, after closing weaker yesterday (R18.31/$*).
EM currencies were mixed yesterday; the RUB (+2.5%) and CNY (+0.5%) were the biggest gainers; the PLN (-1.7%), HUF (-1.6%) and CZK (-1.6%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

UK labour data for March is on the cards for today; wage growth is expected to have slowed in the three months ending in March.
The ILO unemployment rate is expected to have increased to 4.5% in March, from 4.4% in April.

ECB Governing Council members Joachim Nagel and Jose Luis Escriva have jointly commented that the central bank must be careful in deciding on its next interest rate move.
These remarks come on the back of high uncertainty about President Trump’s trade policies.
They noted that the trade policies pose difficulties for policymakers in setting monetary policy in the Eurozone.
Nagel added that it is important for the bank “not to overreact by overemphasizing specific announcements that could change shortly afterwards”.
Policymakers are weighing further rate cuts after a 7th interest rate reduction in April.

ECB Governing Council member Martins Kazaks commented that the central bank should exercise caution at the next policy meeting, even as he supports a further interest rate cut.
Kazaks noted that “financial markets at the moment are expecting another rate cut in June”.
He indicated that he agrees with investors’ expectations for further rate cuts this year.
Several ECB policymakers are due to comment on the economy and monetary policy later today.

Fed Governor Adriana Kugler noted that the Trump administration’s tariff policies are likely to boost inflation and weigh on economic growth.
This is expected despite the recently announced reduction in tariffs on China.
Kugler remarked that “trade policies are evolving and are likely to continue shifting”.
The US and China yesterday announced that they would temporarily lower tariffs on each other’s products to allow both countries to work towards a more comprehensive trade agreement.
Kugler remarked that she expects the tariffs to amount to a negative supply shock, leading to both weaker economic growth and consumer demand as prices rise.

Chicago Fed President Austan Goolsbee noted that there is still a risk of higher consumer prices and slower growth amid elevated uncertainty about US trade policy.
He added that the temporary trade reprieve has reduced, but not eliminated, the potential of a shock to the US economy.

The US April CPI will be in focus today and is likely to come in at 2.4% y/y, matching March’s print.
On a m/m basis, headline CPI is likely to have increased by 0.3% in April, after having declined by 0.1% in March.
Core CPI is expected to come in at 2.8% y/y, unchanged from March.
The April print is expected to provide new clues about how US tariffs are affecting consumer prices.
The NFIB small business optimism index for April is likely to have slipped further, to 95.0, from 97.4 in March.
The NFIB small business economic trends survey highlighted that a net 13% of small business owners plan to create new jobs in the next three to six months.

Locally, Stats SA today will release the Quarterly Labour Force Survey (QLFS) for Q1:25; the unemployment rate improved to 31.9% in Q4:24, from 32.1% in Q3:24.

Brent crude oil is currently at $64.86/bbl; ($64.96/bbl*).
Gold is at $3257/oz ($3224/oz*).
SA CDS 217bps*, Brazil 166bps* and Turkey 316bps*.
Yields: US 10yr at 4.45%*, German bund at 2.64%*, SA 10-year generic at 10.54%*, SA’s R2035 at 10.50%*.

* Denotes yesterday’s close.

Key events and data:

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