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 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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