In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is weaker this morning, at R19.19/$, after closing weaker yesterday (R19.17/$*).
- EM currencies were mixed yesterday; the BRL (+0.7%), KRW (+0.2%) and CLP (+0.2%) were the biggest gainers; the RUB (-0.6%), PEN (-0.4%) and THB (-0.4%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.
- BOJ Governor Kazuo Ueda commented today that the central bank would raise interest rates further if inflation increases as the bank expects.
- The BOJ expects to have achieved its inflation goal towards the year ending in March 2026.
- Governor Ueda also added that the BOJ would provide liquidity if geopolitical risks caused disruptions in financial markets.
- The BOJ will meet on Friday and is expected to keep rates unchanged at that meeting.
- ECB Governing Council member Mario Centeno commented yesterday that the ECB might cut interest rates by more than 100 bps this year.
- He added that inflation might moderate towards the bank’s 2% target faster than expected in March.
- Centeno also said that inflation could fall below 2%, even if only temporarily.
- Centeno stressed that the central bank should not be lowering interest rates only when inflation reaches the target.
- He said that an interest rate target at the end of the monetary policy process of 2% would be a good benchmark for the rate cutting cycle.
- Several countries’ PMI data releases for April are scheduled for release today.
- The Eurozone composite PMI for April is expected to provide an indication of whether the economy continued to strengthen into Q2:24.
- The composite PMI is likely to have increased to 50.7 in April, from 50.3 in March.
- Both the manufacturing and services PMIs are expected to have improved in April.
- Activity is expected to improve over the course of 2024; however, momentum is likely to be gradual as the economy continues to feel the impact of the series of interest rate increases.
- The UK composite PMI for April, also due out today, is expected to come in at 52.6 in April, from 52.8 in March.
- The manufacturing PMI is likely to have increased marginally in April, while the services PMI is expected to have slipped slightly in April.
- The US composite PMI is expected to 52.0 in April, from 52.1 in March.
- Both the manufacturing and services are expected to have increased in April, albeit only slightly.
- US new homes sales for March are due out today; a recovery is expected in March following February’s surprise decline.
- It’s likely that prospective buyers have started considering new homes, as inventory of existing homes remains historically low.
- Locally, the SARB’s leading indicator for February is scheduled for release today; the index increased to 110.8 in January.
- Eskom: loadshedding remains suspended until further notice.
- Brent crude is up this morning, and up by 13.6% year-to-date.
- The gold price is down this morning, and up by 11.9% year-to-date.
- Brent crude oil is currently at $87.52/bbl; ($87.00/bbl*).
- Gold is at $2307/oz ($2329/oz*).
- SA CDS 250bps*, Brazil 158bps* and Turkey 310bps*.
- Yields: US 10yr at 4.60%*, German bund at 2.48%*, SA 10-year generic at 12.14%*, SA’s R2030 at 10.74%*.
* Denotes yesterday’s close.
Key events and data:
- 09h00: SA SARB leading indicator (February)
- 10h00: Eurozone HCOB manufacturing, services and composite PMI (April)
- 10h30: UK S&P Global manufacturing, services and composite PMI (April)
- 15h45: US S&P Global manufacturing, services and composite PMI (April)
- 16h00: US new home sales (March)
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