In the loop

What you should know this morning:

• The rand is weaker this morning, at R17.74/$, after closing stronger yesterday (R17.69/$*).
• EM currencies were mixed yesterday; the COP (+0.5%), MYR (+0.1%) and ZAR (+0.1%) were the biggest gainers; the HUF (-2.7%), PLN (-2.1%) and CZK (-1.2%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• The Fed raised its benchmark rate by 75 bps yesterday, as expected, as it continues its fight to tame inflation; the decision was unanimous. 
• The increase lifts the Fed funds rate to a range of 3% to 3.25%.
• Fed Chair Jerome Powell reiterated that the policymakers are “highly attentive to inflation risks.” 
• The bank noted that it “anticipates that ongoing increases in the target range will be appropriate”.
• The Fed’s dot plot, which signals the bank’s outlook for the path of interest rates, sees rates rising to 4.4% year end and to 4.6% in 2023.  
• Rates are then seen coming down to 3.9% in 2024 and 2.9% in 2025.

• The Bank of Japan kept policy unchanged, as expected.
• The bank held steady despite expecting faster inflation for the current fiscal year.
• Governor Haruhiko Kuroda signalled “still a long way to go” before policy can be normalised.

• Investors are now focusing on the BOE’s policy decision later today; the central bank is largely expected to hike rate by 50 bps, to 2.25%.
• There is a possibility that the bank could consider hiking more aggressively.
• The recently announced emergency energy support package, however, reduces the need to increase the pace of tightening.
• Inflation could peak at a lower level and could decline faster next year with the help of the support package. 
• The Norges Bank and the Swiss National Bank are both expected to hike rates later today.

• The Turkish central bank also meets today and will likely hold rates unchanged at 13%.
• The bank noted the August interest rate cut was “adequate under the current outlook”.
• The bank is expected to cut rates again in Q4:22 if the recent slowdown in leading indicators continues.

• Locally, the spotlight is on the SARB’s MPC decision later today; the bank is largely expected to hike the repo rate by 75 bps, to 6.25%. 
• Investors will likely keep a close eye on changes to the bank’s inflation and growth forecasts. 
• Eskom continues with Stage 5 loadshedding today.

• Brent crude oil is up this morning, and up by 15.9% year-to-date.
• The gold price is down this morning, and down by 9.1% year-to-date.

• Brent crude oil is currently at $90.17/bbl; ($89.83/bbl*).
• Gold is at $1662/oz ($1665/oz*).
• SA CDS 289bps*, Brazil 261bps* and Turkey 739bps*.
• Yields: US 10yr at 3.52%*, German bund at 1.89%* and SA 10-year generic at 10.97%*, SA’s R186 at 9.08%*.

* Denotes yesterday’s close.

 Key events and data: 

• 10h00: Eurozone ECB publishes economic bulletin
• 13h00: UK BOE MPC interest rate decision – 50 bps hike expected
• 14h30: US current account balance (Q2:22), initial jobless claims (17 September)
• 15h00: SA SARB MPC interest rate decision – 75 bps hike expected
• 16h00: Eurozone consumer confidence (September)
• 16h00: US leading index (August)

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