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In the loop 12 December 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.68/$, after closing stronger yesterday (R17.71/$*).
  • EM currencies were mixed yesterday; the BRL (+1.5%), ZAR (+0.7%) and COP (+0.6%) were the biggest gainers; the RUB (-2.5%), PHP (-0.5%) and PLN (-0.4%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
 
  • Central bank watch: Brazil’s central bank yesterday hiked the Selic rate by 100 bps, to 12.25%.
  • The central bank noted two more interest rate hikes of the same magnitude as in the pipeline.
  • The Bank of Canada reduced rates yesterday by 50 bps, to 3.25%, as it moves towards a neutral stance.
  • The bank signalled that it is now ready to slow down monetary easing.
  • The Swiss National Bank (SNB) will meet today and is expected to cut rates for a fourth time.
 
  • The UK’s Royal Institute of Chartered Surveyors (RICS) house price balance increased to a two-year high in November, to 25%, from 16% in October.
  • The survey showed that sales expectations and new buyer enquiries remained in positive territory in November.
  • Buyers are being supported by the BOE’s interest rate cuts as well as the end of the uncertainty around the Budget.
  • Today’s data is the latest sign that the UK housing market recovery has continued.
  • However, the broader macroeconomic environment could pose additional headwinds to consumers in the coming months.
 
  • Investors are keeping an eye on the ECB monetary policy announcement later today.
  • The ECB is largely expected to cut its benchmark interest rate by 25 bps for a fourth consecutive meeting tomorrow.
  • A deteriorating economic outlook supports the case for the ECB to cut rates further.
 
  • Locally, today sees the release of Q4:24 BER inflation expectations.
  • The 2024 average inflation expectations of analysts, business people and trade unions declined to 5.1% in Q3:24, down from 5.3% in Q2:24.
  • A further deceleration in inflation expectations is likely given lower actual inflation outcomes of recent months.
  • The SARB will keep a close eye on the survey results as input for the January MPC meeting.
  • The November PPI is also on the cards today and is expected at 0.2% y/y, from -0.7% y/y in October.
  • The Q3:24 non-farm payrolls are due out today; payrolls increased by 0.4% q/q in Q2:24.
 
  • Brent crude is up this morning, and down by 4.4% year-to-date.
  • The gold price is down this morning, and up by 31.5% year-to-date.
 
  • Brent crude oil is currently at $73.65/bbl; ($73.52/bbl*).
  • Gold is at $2713/oz ($2718/oz*).
  • SA CDS 178bps*, Brazil 166bps* and Turkey 247bps*.
  • Yields: US 10yr at 4.27%*, German bund at 2.12%*, SA 10-year generic at 10.14%*, SA’s R2035 at 10.18%*.
 

* Denotes yesterday’s close. 

Key events and data:

  • 10h00: SA BER inflation expectations (Q4:24)
  • 11h30: SA PPI (November), non-farm payrolls (Q3:24)
  • 15h15: Eurozone ECB interest rate decision – 25 bps cut expected
  • 15h30: US PPI (November), initial jobless claims (7 December)
 

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