In the loop 13 February 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.46/$, after closing stronger yesterday (R18.47/$*).
EM currencies were mixed yesterday; the RUB (+2.0%), HUF (+1.2%) and PLN (+1.1%) were the biggest gainers; the COP (-0.7%), KRW (-0.2%) and TRY (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

Eurozone industrial production for December is due out today.
Industrial production struggled in the quarter due to weakness in Germany.
Production is likely to have declined by 3.1% y/y in December, following a 1.9% y/y decline in November.
On a m/m basis, production is likely to have fallen by 0.6% in December, after having increased by 0.2% in November.
The ECB’s Economic Bulletin is scheduled for release today.

BOE policymaker Megan Greene has expressed her preference for interest rates to remain high for longer to combat inflation, which is unlikely to moderate on its own.
Greene noted "uncomfortable" economic data, supply constraints, and risks to productivity growth as reasons for the bank to remain cautious.
She added that UK interest rates are “increasingly sensitive to international data, particularly from the US”.
She remarked that in order to maintain high rates, the BOE may be required to create a negative output gap, which could drive up unemployment.

The UK’s Royal Institute of Chartered Surveyors (RICS) house price balance decreased to 22% in January, from a downwardly revised 26% in December.
The survey's measures of growth in new buyer enquiries and agreed sales both weakened in January.
However, despite current headwinds, the survey showed that agents remain positive about sales and house prices this year.

The UK GDP for Q4:24, due out today, is expected to have contracted, after having flatlined in Q3:24.
Government consumption will likely support economic activity in 2025.
Monthly GDP is expected to have increased 0.1% m/m in December, matching November’s increase.
Industrial production for December will also be released; industrial production is expected to have declined by 2.1% y/y in December, after having declined by 1.8% y/y in November.
The sector is expected to continue to struggle, with no clear signs of any meaningful pickup in the coming months.

Fed Chair Jerome Powell commented that the Fed has made significant progress toward bringing inflation down but acknowledged that there is still more work to do.
Powell added that the Fed funds rate might remain elevated for the foreseeable future.
He added that the Fed would prefer to “keep policy restrictive for now".
He reiterated that the central bank does not need to be in a hurry to adjust the bank’s policy stance.

Locally, mining production for December is due out today; production is likely to have increased by 1.8% y/y in December, after having declined by 0.9% y/y in November.
Mining production declined by 0.2% m/m in November.

Brent crude oil is currently at $74.49/bbl; ($75.18/bbl*).
Gold is at $2922/oz ($2902/oz*).
SA CDS 203bps*, Brazil 171bps* and Turkey 253bps*.
Yields: US 10yr at 4.54%*, German bund at 2.43%*, SA 10-year generic at 10.52%*, SA’s R2035 at 10.53%*.

* Denotes yesterday’s close.

Key events and data:

09h00: UK GDP (Q4:24), industrial production (December), manufacturing production (December), trade balance (December)
11h00: Eurozone ECB publishes Economic Bulletin
11h30: SA mining production (December)
12h00: Eurozone industrial production (December)
15h30: US PPI (January)
15h30: US initial jobless claims (8 February)

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