In the loop 13 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.75/$, after closing weaker on Friday (R18.72/$*).
EM currencies were mixed on Friday; the MXN (-0.9%), THB (-0.9%) and ZAR (-0.8%) were the biggest losers, the BRL (+0.6%) the biggest gainer.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

In Asia, the People’s Bank of China (PBOC) will meet this week and is expected to keep the 1 yr medium-term lending facility rate unchanged.
Retail sales for October, also scheduled for release on Wednesday, is likely to have increased – due to low base effects rather than stronger consumption.
Japan’s Q3:13 GDP, due out on Wednesday, likely contracted.
India’s CPI for October, due out today, is expected to have moderated given a raft of government measures restraining price gains for food and fuel.
The Philippines Central Bank will meet on Thursday and is expected to keep rates on hold after October’s off-meeting hike.

In the US, CPI data for October will be released tomorrow and is expected to have moderated to 3.3% y/y, from 3.7% y/y in September.
Core CPI is expected to have remained unchanged in October, at 4.1% y/y.
The NFIB small business optimism, also due out tomorrow, is likely to have remained depressed in October after dipping in September.
Retail sales for October, due out on Wednesday, is expected to have slowed, driven by a decline in new vehicle and gasoline sales.
PPI for October, also out on Wednesday, likely slowed due to lower energy prices.
The Empire manufacturing index for November is likely to have improved to -3.0, from -4.6 in October; optimism among survey respondents has been waning, particularly for new orders and shipments.
The NAHB housing market index is due out on Thursday; sentiment could improve slightly in November.
Higher mortgage rates throughout October likely slowed the pace of building permit issuance and housing starts; the data is due out on Friday.

In the UK, CPI for October is the key focus this week; it likely moderated to below 5% for the first time in two years.
Such an outcome would ease the pressure on the BOE to hike rates further.
UK jobs data, due out on Tuesday, will likely offer further evidence of labour demand cooling and wage pressures softening.
In the Eurozone, the second estimate of CPI for October, due out on Friday, will likely confirm that underlying price pressures are subsiding.
This should support the case for the ECB to keep rates unchanged at its next policy meeting.

Locally, Stats SA’s Quarterly Labour Force Survey (QLFS) is scheduled for release tomorrow; the unemployment rate is likely to have slipped to 32.5% in Q3:23, from 32.6% in Q2:23.
Retail sales for September, due out on Wednesday, is expected to have declined by 0.4% y/y in September, after having fallen by 0.5% y/y in August.
On a m/m basis, sales are likely to have increased by 0.1% in September, following a 0.2% in August.

Eskom: Stage 2 loadshedding is currently in place until 4pm, Stage 3 loadshedding will be implemented then until 5am tomorrow.
Electricity Minister Kgosientsho Ramakgopa commented yesterday that SA is accelerating the deployment of up to 3 GW of gas-fired power generation capacity.
The 3 GW of planned gas-powered capacity will help plug the energy deficit.
The project is currently at procurement stage and includes a 2 GW mobile facility as well as a 1 GW gas-to-power plant located near Coega in the Eastern Cape.

Brent crude oil is currently at $80.67/bbl; ($81.43/bbl*).
Gold is at $1937/oz ($1940/oz*).
SA CDS 265bps*, Brazil 166bps* and Turkey 379bps*.
Yields: US 10yr at 4.65%*, German bund at 2.71%* and SA 10-year generic at 11.66%*, SA’s R2030 at 10.39%*.

* Denotes Friday’s close.

Key events and data:

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