In the loop

What you should know this morning:

• The rand is stronger this morning, at R17.29/$, after closing stronger on Friday (R17.34/$*).
• EM currencies were mixed on Friday; the ZAR (+0.6%), ARS (+0.6%) and HUF (+0.6%) were the biggest gainers; the THB (-0.4%), TWD (-0.3%) and MYR (-0.2%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

• Japan’s leading index increased in July; final figures confirmed a rise to 106.1, from 105.1 in June.
• Incoming data has shown relatively limited economic damage from US tariffs.
• Tomorrow will see the release of industrial production and retail sales data for August.
• The minutes of the July BOJ meeting showed a hawkish shift, with two members preferring tighter monetary policy.
• Mounting price pressures are being closely monitored for signs that inflation is becoming more persistent, according to the July meeting minutes.
• The BOJ kept its policy rate unchanged at 0.5% earlier this month; their next meeting will be on 30 October.

• A US federal government shutdown looms, with lawmakers scrambling to pass the necessary legislation before Wednesday.
• The Senate needs at least seven Democratic votes to pass a stop-gap bill to keep funding going until mid-November.
• US President Trump will meet congressional leaders at the White House today for talks, after cancelling a meeting with top Democrats.
• Federal government shutdowns are costly, leaving many public services shuttered and thousands of workers furloughed.
• The White House’s Office of Management and Budget last week directed federal agencies to consider using the shutdown to fire employees rather than temporarily lay them off.
• A major sticking point is the extension of tax credits linked to the Affordable Care Act, which is due to expire at the end of the year.
• The last US government shutdown, during Trump’s first administration, lasted 35 days – the longest in history.
• A shutdown would threaten the release of key economic data, in particular September’s payrolls report, which is due out on Friday.

• The US has signalled that it is open to the extension of African Growth and Opportunity Act (AGOA).
• AGOA, which has been effectively overridden by the Trump administration’s tariff policies in many cases, will lapse tomorrow when a 10-year extension, agreed in 2015, runs out.
• Massad Boulos, President Donald Trump’s senior adviser for Africa, said the administration “agreed with the objectives” of AGOA.
• Any extension would need to be approved by Congress, which has not yet taken up the necessary legislation.
• In the past, the US has retroactively extended expired trade legislation and refunded importers.
• A White House official confirmed on Friday that “the administration is supportive of a one-year extension of the programme”.

• Locally, there are no major data releases scheduled for today.
• Tomorrow will see the release of the Q2:25 Quarterly Employment Statistics (QES) and private sector credit extended for August.
• Private sector credit growth was 5.8% y/y in July.
• The SARB’s September Quarterly Bulletin as well as the monthly trade balance and budget balance are also due out tomorrow.

• Brent crude is down this morning, and down by 6.5% year-to-date.
• The gold price is currently trading at a new high as fears of a US government shutdown sees precious metal prices rally.
• The gold price is up this morning, and up by 45.0% year-to-date.

• Brent crude oil is currently at $69.80/bbl; ($70.13/bbl*).
• Gold is at $3806/oz ($3760/oz*).
• SA CDS 168bps*, Brazil 138bps* and Turkey 259bps*.
• Yields: US 10yr at 4.18%*, German bund at 2.75%*, SA 10-year generic at 9.26%*, SA’s R2035 at 9.14%*.

* Denotes Friday’s close.

Key events and data:

• 10h30: UK mortgage applications (August)
• 11h00: Eurozone consumer confidence (September – final), economic, industrial and services confidence (September)
• 16h00: US pending home sales (August)
• 16h30: US Dallas Fed manufacturing activity (September)

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