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In the loop 30 August 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.75/$, after closing stronger yesterday (R17.77/$*).
  • EM currencies were mixed yesterday; the MYR (+0.8%), CNY (+0.4%) and KRW (+0.4%) were the biggest gainers; the MXN (-1.1%), BRL (-1.1%) and COP (-0.6%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
 
  • Eurozone CPI figures for August will likely show headline and core inflation as having moderated further.
  • CPI is likely to come in at 2.2% y/y in August, from 2.6% y/y in July; core CPI is also expected to have moderated in August.
  • On a m/m basis, CPI is likely to come in at 0.2% in August, after having stagnated in July.
  • The data is expected to support the case for further interest rate cuts by the ECB.
 
  • UK house price data for August may highlight the recovery in house prices as firming after the BOE’s decision to begin cutting rates earlier this month.
  • The interest rate cut has helped balance the risks around the UK’s housing price outlook.
 
  • US personal income and spending for July will be in the spotlight today.
  • Personal income is expected to have increased by 0.2% m/m in July, the same as in June.
  • Personal spending is also expected to have improved in July, by 0.5% m/m, following a 0.3% m/m increase in June.
  • The Fed will keep an eye on the core PCE, which is expected to have increased by 0.2% m/m in July, matching June’s increase.
  • The Fed is largely expected to commence its rate cutting cycle in September.
  • Today’s data is likely to support the views expressed by several policymakers that it is time to start trimming rates.
  • The University of Michigan sentiment (final estimate) index for August is likely to have been revised lower.
 
  • Locally, the M3 and private sector credit extension (PSCE) for July are due today. 
  • PSCE is likely to come in at 4.30% y/y in July, from 4.27% y/y in June.
  • The monthly Budget balance data for July is likely to have swung into a deficit of R155.7bn, from a surplus of R38.6bn in June.
  • The July trade balance is also on the cards; a trade surplus of R21.5bn is expected, from R24.2bn in June.
 
  • Brent crude is up this morning, and up by 4.1% year-to-date.
  • The gold price is down this morning, and up by 21.8% year-to-date.
 
  • Brent crude oil is currently at $80.18/bbl; ($79.94/bbl*).
  • Gold is at $2514/oz ($2525/oz*).
  • SA CDS 183bps*, Brazil 145bps* and Turkey 271bps*.
  • Yields: US 10yr at 3.86%*, German bund at 2.27%*, SA 10-year generic at 10.40%*, SA’s R2030 at 9.11%*.
 

* Denotes yesterday’s close.

Key events and data:

  • 08h00: SA M3 and PSCE (July)
  • 08h00: UK Nationwide house price index (August)
  • 10h30; UK consumer credit (July)
  • 11h00: Eurozone CPI (August), unemployment rate (August)
  • 14h00: SA trade balance (July), monthly budget balance (July)
  • 14h30: US personal income and spending (July)
  • 16h00: US University of Michigan sentiment index, 1 yr and 5-10 yr inflation expectations (August – final)
 

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