In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R17.52/$, after closing stronger yesterday (R17.53/$*).
- EM currencies were mixed yesterday; the RUB (+0.8%), MXN (+0.7%) and CLP (+0.5%) were the biggest gainers; the PHP (-0.5%), MYR (-0.5%) and IDR (-0.4%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
- Central bank watch: the Bank of Canada will meet today and is expected to cut its benchmark interest rate by 50 bps, to 3.75%.
- This is expected on the back of the downside surprise in September inflation as well at the Fed’s 50 bps cut in the Fed funds rate in September.
- ECB President Christine Lagarde commented at the IMF gathering that she sees the direction of borrowing costs in the Eurozone as clear.
- However, she noted that the pace at which the ECB may lower rates is still to be decided.
- She also noted that the ECB has adopted a “sensible approach and one that should be continued with that caution element about it”.
- Lagarde noted disinflation as on the right track and described the recent inflation outcomes as “relatively reassuring”.
- ECB Governing Council member Francois Villeroy de Galhau believes that the bank’s 2% inflation goal may be achieved as early as the start of next year.
- Eurozone consumer confidence for October is expected to have improved slightly.
- The index is expected to come in at -12.5 in October, from -12.9 in September.
- US existing homes sales, due out today, will likely have increased in September.
- Existing home sales are expected to have increased by 0.5% m/m (to 3.88m) in September, after having declined by 2.5% m/m (to 3.86m) in August.
- Declining mortgage rates in September are likely to have supported sales during the month.
- The Fed’s Beige Book for September is on the cards later today.
- The Beige Book is likely to show that disruptions from hurricanes are likely to have impacted economic activity in several districts.
- A number of districts have already noted major disruptions in certain sectors, including transportation, energy, and agriculture.
- Locally, CPI for September is in focus today and is expected at 3.8% y/y, from 4.4% y/y in August.
- On a m/m basis, CPI is expected to have increased by 0.1% in September, matching August’s increase.
- Core CPI is likely to come in at 4.1% y/y in September, the same as in August.
- Brent crude is down this morning, and down by 1.4% year-to-date.
- The gold price is up this morning, and up by 33.4% year-to-date.
- Brent crude oil is currently at $75.97/bbl; ($76.04/bbl*).
- Gold is at $2752/oz ($2745/oz*).
- SA CDS 186bps*, Brazil 158bps* and Turkey 274bps*.
- Yields: US 10yr at 4.22%*, German bund at 2.31%*, SA 10-year generic at 10.56%*, SA’s R2035 at 10.63%*.
* Denotes yesterday’s close.
Key events and data:
- 10h00: SA CPI (September)
- 13h00: US MBA mortgage applications (18 October)
- 16h00: Eurozone consumer confidence (October)
- 16h00: US existing home sales (September)
- 20h00: US Fed Beige Book
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