In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.51/$, after closing weaker yesterday (R16.62/$*).
• EM currencies were mixed yesterday; the COP (+0.6%), RUB (+0.4%) and CZK (+0.2%) were the biggest gainers; the MXN (-1.1%), KRW (-0.4%) and TWD (-0.3%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

• Iran war: the conflict continues to pose upside risk to inflation and a downside risk to growth.

• BOE Governor Andrew Bailey noted yesterday BOE Governor Andrew Bailey said the global economy faces heightened uncertainty from weak growth, supply shocks, high debt and Middle East tensions.
• Despite these challenges, he noted that economies and financial systems have so far shown considerable resilience, supported by stronger banking systems and reforms implemented since the global financial crisis.
• Bailey highlighted the potential economic benefits of artificial intelligence but also warned that growing AI-related financial, operational and cyber risks require close monitoring.
• He stressed that central banks must maintain a clear focus on returning inflation to target while remaining vigilant to evolving risks.
• He cautioned that higher energy prices and continuing geopolitical tensions have increased uncertainty around the inflation outlook and interest-rate path.

• BOE policymaker Megan Greene warned that policymakers must act now to assess the risk of the global energy shock fuelling persistent inflationary pressures. 
• Greene highlighted a material risk of second-round inflation effects stemming from the US-Iran war. 
• Greene also expressed concern over the limited progress in wage disinflation, suggesting that persistent wage pressures could complicate efforts to bring inflation under control.
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• ECB President Christine Lagarde yesterday reiterated that the central bank has the necessary tools to stabilise financial markets if required. 
• Lagarde commented that the ECB remains attentive to the orderly functioning of financial markets and is equipped to counter unwarranted and disorderly market movements that threaten the effective transmission of monetary policy, subject to clearly defined eligibility criteria. 
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• However, she declined to comment on individual countries.

• St. Louis Fed President Alberto Musalem yesterday signalled that further interest rate increases would likely be needed over the next six to nine months to bring inflation back to the Fed's 2% target. 
• Musalem stressed that additional monetary policy tightening would be necessary to ensure inflation returns to target in a timely manner. 
• However, he stopped short of endorsing a rate hike at this month's policy meeting.
• He emphasised that he approaches each meeting with an open mind and does not want to prejudge policy decisions.

• The US University of Michigan's consumer sentiment index for October is scheduled for release today; sentiment likely slipped to 47.7 in October, from 48.1 in September.
• One-year ahead inflation expectations are expected to have increased to 4.7% in October, from 4.6% in September.
• Five-to-ten-year ahead inflation expectations are expected to come in 3.5% in October, from 3.4% in September.

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

• Brent crude is down this morning, and up by 69.3% year-to-date.
• The gold price is up this morning, and down by 3.3% year-to-date.

• Brent crude oil is currently at $102.93/bbl; ($104.28/bbl*).
• Gold is at $4178/oz ($4132/oz*).
• SA CDS 139bps*, Brazil 110bps* and Turkey 249bps*.
• Yields: US 10yr at 5.22%*, German bund at 3.49%*, SA 10-year generic at 9.05%*, SA's R2035 at 8.84%*.

* Denotes yesterday's close. 

Key events and data:

• 08h00: Japan machine tool orders (September)
• 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (October)

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