In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.46/$, after closing stronger yesterday (R16.53/$*).
• EM currencies were mixed yesterday; the PLN (+0.9%), HUF (+0.8%) and CZK (+0.8%) were the biggest gainers; the BRL (-1.3%), TWD (-0.7%) and PHP (-0.3%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• Iran war: regional tensions intensified further, with escalating Houthi attacks drawing Saudi Arabia more deeply into the conflict.
• Risks around the Strait of Hormuz and Gulf energy infrastructure remain elevated, with an oil tanker catching fire near Hormuz.
• The US is keeping military options against Iranian nuclear and energy sites on the table; further, Washington imposed new sanctions on 16 individuals and 10 entities linked to Iran.

• ECB Governing Council member Martins Kazaks yesterday said the ECB can afford to assess evolving inflation dynamics before deciding on further interest rate increases.
• Kazaks noted that persistently elevated oil and gas prices are likely to sustain inflationary pressures, while the recent selloff in government bonds could weigh on economic activity.
• Although he expects inflationary forces to dominate in the near term, Kazaks stressed that the ECB is not behind the curve and faces no immediate pressure to raise rates.
• His remarks come as policymakers consider further monetary tightening following two rate increases since the start of the Iran war, with inflation approaching 4% and remaining well above the ECB's 2% target.

• Eurozone CPI of September (final estimate) is due out today and is likely to come in at 3.8% y/y in September, unchanged from the previous estimate, and from 3.2% y/y August.
• On a m/m basis, CPI is expected to have increased by 0.6% in September, also unchanged from the previous estimate, after having increased by 0.4% m/m in August.
• Core CPI is likely to have remained unchanged at 2.5% y/y in September, from 2.4% y/y in August.
• The monthly trade report for August is expected to continue showing that the Eurozone is offsetting muted demand from the US in the face of higher US tariffs with sales elsewhere.

• BOE policymaker Megan Greene yesterday called for further interest rate increases to contain the risk of significant second-round inflationary effects from elevated energy prices.
• Greene noted growing evidence that spare capacity in the UK economy may have peaked, citing stronger-than-expected GDP data released earlier in the day.
• She argued that this suggests monetary policy may no longer be restrictive, strengthening the case for further tightening.
• Greene emphasised the need for policymakers to act pre-emptively to prevent higher energy costs from feeding into broader and more persistent inflationary pressures.

• Chicago Fed President Austan Goolsbee commented that US consumer spending remains resilient and broadly supported across income groups, rather than being driven primarily by wealth gains from the strong stock market. 
• He argued that robust household spending reflects underlying economic strength.
• He challenged concerns that consumption is being sustained disproportionately by higher-income households benefiting from rising equity prices. 
• His remarks suggest that consumer demand remains an important source of support for the US economy.

• San Francisco Fed President Mary Daly expressed growing concern about the persistence of inflation, signalling a significant shift in her policy outlook over the past six months.
• Daly said she is now less inclined to look through inflationary pressures stemming from supply disruptions, warning that risks to inflation are firmly tilted to the upside.
• She highlighted rising market-based measures of longer-term inflation expectations and businesses' increasing willingness to pass higher costs on to consumers as particularly concerning developments.

• US industrial production is expected to have increased by 0.4% m/m in September, after flatlining in August.
• Mining and utilities activity likely provided a boost to overall production.

• Locally, it is a quiet day as far as data releases are concerned.

• Brent crude is down this morning, and up by 73.3% year-to-date.
• The gold price is up this morning, and down by 3.4% year-to-date.

• Brent crude oil is currently at $105.42/bbl; ($105.92/bbl*).
• Gold is at $4173/oz ($4148/oz*).
• SA CDS 133bps*, Brazil 116bps* and Turkey 250bps*.
• Yields: US 10yr at 5.06%*, German bund at 3.41%*, SA 10-year generic at 8.91%*, SA's R2035 at 8.70%*.

* Denotes yesterday's close.

Key events and data:

• 11h00: Eurozone trade balance (August), CPI (August)
• 15h15: US industrial production (September), capacity utilisation (September), manufacturing production (September)

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