In the loop 25 September 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.30/$, after closing weaker yesterday (R17.34/$*).
EM currencies were mixed yesterday; the BRL (+1.5%), CLP (+1.4%) and MYR (+1.1%) were the biggest gainers; the PHP (-0.5%), INR (-0.1%) and RUB (-0.1%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

Central bank watch: the Nigerian central bank has raised its key interest rate by 50bps, to 27.25%; the decision was unanimous.
Governor Olayemi Cardoso commented that the MPC remains resolute in its focus to bring inflation under control.
The National Bank of Hungary lowered the key interest rate by 25bps yesterday, to 6.5%.
The governor noted that the “Monetary Council will continue to make cautious, patient and stability-oriented decisions”.
The central bank of Sweden is due to meet today and will likely trim its benchmark interest rate by 25bps, to 3.25%.

BOE Governor Andrew Bailey noted yesterday that interest rates were “unlikely to fall to ultra-low levels without another bout of economic crises on the scale of the financial crisis and the pandemic”.
He added that big shocks were necessary to bring borrowing costs back to near zero.
Bailey expects the BOE to ease borrowing costs gradually.

The US S&P CoreLogic house price index for July came in at 5.9% y/y, from 6.5% y/y in June.
The FHFA house price index increased by 0.1% m/m in July, after having declined by 0.2% in June.
US new homes sales for August are due out today; a decline is expected.
The recent decline in mortgage rates was likely not enough to boost new homes sales.

The US Conference Board consumer confidence index fell by 6.9 pts (the biggest drop since August 2021), to 98.7 in September, from an upwardly revised 105.6 in August.
The expectations measure for the next six months also slipped in September, to 81.7, from 86.3 in August.
The present situation index fell to 124.3 in September, from 134.6 in August.
The deterioration comes on the back of increasing concern over the US labour market.
It has also increased speculation that the Fed might cut rates by a further 50bps this year.

Fed Governor Michelle Bowman commented yesterday that the Fed should trim rates at a “measured” pace.
Bowman is still concerned that inflationary risks remain and that the labour market hasn’t exhibited any signs of significant weakening.
She added that she still “sees greater risks to price stability, especially while the labour market continues to be near estimates of full employment”.
Bowman’s comments are in contrast with other Fed policymakers who have indicated that risks to achieving the bank’s two goals are roughly balanced or leaning toward employment.

Locally, the SARB’s leading indicator for July is scheduled for release; the index increased to 111.4 in June.

Brent crude oil is currently at $75.04/bbl; ($75.17/bbl*).
Gold is at $2657/oz ($2653/oz*).
SA CDS 183bps*, Brazil 157bps* and Turkey 272bps*.
Yields: US 10yr at 3.72%*, German bund at 2.14%*, SA 10-year generic at 10.03%**, SA’s R2035 at 10.09%**.

* Denotes yesterday’s close.

** Denotes Monday’s close.

Key events and data:

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