In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R16.40/$, after closing weaker yesterday (R16.43/$*).
- EM currencies were mixed yesterday; the RUB (+0.9%), BRL (+0.6%) and COP (+0.5%) were the biggest gainers; the ARS (-0.4%), TWD (-0.4%) and RON (-0.4%) were the biggest losers.
- Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
- Iran war: Iran has confirmed that it has received Washington's response to Tehran's proposal to reopen the waterway within seven days, although differences persisted over the sequencing of concessions.
- President Trump rejected Iran's proposal in its current form, while Iranian President Masoud Pezeshkian indicated that the reopening process could begin once Washington accepted Tehran's plan.
- The US naval blockade and sanctions therefore remained in place.
- The UK S&P Global consumer sentiment index fell to 41.3 in October, from 42.7 in September, marking its third consecutive monthly decline and its lowest level since July 2023.
- The deterioration reflected mounting concerns over inflation, rising borrowing costs, and weakening household finances.
- The household finance index fell to a 40-month low of 36.7 in October.
- Expectations for household finances over the next 12 months weakened sharply in October; 57% of respondents anticipated further interest rate increases by the BOE.
- Consumers remained cautious about major purchases, while the savings index declined to 39.6 in October, from 40.4 in September.
- Labour market sentiment remained subdued for a fifth consecutive month, reflecting persistent concerns about employment prospects and job security.
- The UK labour data, due out today, will likely show that pay gains in the private sector rose to 3% in the three months to August, from 2.9% previously.
- The unemployment rate is expected to have increased in August, to 5.0%, from 4.9% in July.
- Germany's ZEW survey expectations for October are due out tomorrow; the index is expected to have slipped to 30.0, from 34.7 in September.
- ECB Governing Council member Olaf Sleijpen yesterday warned that the window to limit global warming to the 1.5°C target set under the Paris Agreement is rapidly closing.
- Sleijpen noted that scientific evidence suggests the remaining carbon budget consistent with the 1.5°C target is almost exhausted, making a significant overshoot increasingly likely within the next decade.
- He cautioned that the economic consequences of climate change and environmental degradation are becoming increasingly evident, particularly through more frequent extreme weather events.
- This could threaten economic stability and financial resilience.
- Sleijpen stressed that, while some consequences of global warming are already irreversible, decisive action could still prevent the most severe outcomes.
- US housing starts for September, due out today, likely increased by 1.9% m/m, after August's 2.6% m/m decrease.
- Building permits are expected to have fallen by 1.3% m/m in September, following a 2.1% m/m decline in August.
- Locally, SA business confidence remained relatively stable in September, supported by elevated precious metal prices, stronger tourism activity, and increased vehicle sales.
- The South African Chamber of Commerce and Industry's (SACCI) business confidence index edged down to 134.3 in September, from 135.1 in August.
- SACCI cautioned that elevated fuel prices and rising borrowing costs could undermine the recent improvement in confidence.
- It's a quiet day as far as data releases are concerned.
- Brent crude is up this morning, and up by 80.7% year-to-date.
- The gold price is up this morning, and down by 4.3% year-to-date.
- Brent crude oil is currently at $110.0/bbl; ($109.55/bbl*).
- Gold is at $4132/oz ($4140/oz*).
- SA CDS 130bps*, Brazil 119bps* and Turkey 251bps*.
- Yields: US 10yr at 5.13%*, German bund at 3.45%*, SA 10-year generic at 8.91%*, SA's R2035 at 8.71%*.
* Denotes yesterday's close.
Key events and data:
- 08h00: UK ILO unemployment rate (August), weekly earnings (August), jobless claims (September)
- 10h00: Eurozone current account (August)
- 11h00: Eurozone ZEW survey expectations (October)
- 14h15: US ADP employment (3 October)
- 14h30: US housing starts (September), building permits (September)
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