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In the loop 15 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.23/$, after closing stronger yesterday (R18.29/$*).
  • EM currencies were mixed yesterday; the CLP (+3.6%), ZAR (+2.4%) and PLN (+2.1%) were the biggest gainers, the KRW (-0.3%), MYR (-0.2%) and TRY (-0.1%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up. 
  • The People’s Bank of China (PBOC) has kept its 1-yr medium-term lending facility rate unchanged, as expected.
  • China injected cash (CNY1.46 trillion) into its banking system with one-year policy loans for a 12th consecutive month.
  • The latest net injection was the most since 2016 and may allay fears over a liquidity crunch. 
  • Chinese retail sales increased by 7.6% y/y in October (the fastest rate in five months), from an increase of 5.5% y/y in September.
  • Retail sales were boosted by an extended holiday at the start of the month; other indicators pointed to still-sluggish demand in the Chinese economy.
  • Japan’s GDP contracted more than expected, by 2.1% q/q (saa) in Q3:23, from a downwardly revised increase of 4.5% q/q (saa) in Q2:23. 
  • The contraction came on the back of falling business spending, a lack of recovery in consumer spending, and higher imports in Q3:23.
  • The data underscores the fragility of Japan’s economic recovery.
  • It also supports the case for continued support from the Bank of Japan and the government. 
  • The UK CPI for October is due out today and likely moderated to below 5% for the first time in two years. 
  • CPI is expected to come in at 4.7% y/y in October, from 6.7% y/y in September; on a m/m basis, CPI is likely to have increased by 0.1% in October, after having increased by 0.5% in September.
  • The slippage in headline CPI is expected on the back of lower household energy bills in October.
  • Core CPI, too, is likely to have moderated to 5.8% y/y in October, from 6.1% y/y in September.
  • Such an outcome would ease the pressure on the BOE to hike rates further when it meets in December.  
  • In the US, retail sales for October are expected to have declined, by 0.3% m/m in October, following a 0.7% m/m increase in September, driven by a decline in new vehicle and gasoline sales.
  • A slowdown in wage growth in October likely dampened consumer spending in that month.
  • PPI for October likely slowed due to lower energy prices; PPI is expected to come in at 0.1% m/m in October, after having increased by 0.5% m/m in September.
  • The Empire manufacturing index for November is likely to have improved to -3.0, from -4.6 in October; optimism among survey respondents has been waning, particularly for new orders and shipments.
  • Business inventories for September are also due out today and likely increased by 0.4% m/m, matching August’s increase. 
  • Locally, retail sales for September are expected to have declined by 0.4% y/y, after having fallen by 0.5% y/y in August.
  • On a m/m basis, sales are likely to have increased by 0.1% in September, following a 0.2% increase in August.
  • Eskom: Stage 2 loadshedding is currently in place until 4pm, Stage 3 loadshedding will be implemented then until 5am tomorrow.
  • Brent crude oil is up this morning, and down by 3.7% year-to-date.
  • The gold price is up this morning, and up by 7.8% year-to-date.
  • Brent crude oil is currently at $82.77/bbl; ($82.47/bbl*).
  • Gold is at $1966/oz ($1962/oz*).
  • SA CDS 256bps*, Brazil 162bps* and Turkey 364bps*.
  • Yields: US 10yr at 4.44%*, German bund at 2.60%* and SA 10-year generic at 11.50%*, SA’s R2030 at 10.21%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 09h00: UK CPI, PPI, RPI (October)
  • 11h30: UK house price index (September)
  • 12h00: Eurozone industrial production (September), trade balance (September)
  • 13h00: SA retail sales (September)
  • 14h00: US MBA mortgage applications (10 November)
  • 15h30: US retail sales (October), PPI (October), Empire manufacturing (November)
  • 17h00: US business inventories (September)

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