In the loop

What you should know this morning:

• The rand is weaker this morning, at R17.25/$, after closing stronger yesterday (R17.19/$*).
• EM currencies were mixed yesterday; the RUB (+1.3%), PEN (+0.5%) and PHP (+0.4) were the biggest gainers; the HUF (-1.4%), BRL (-0.7%) and CZK (-0.6%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng is down.

• Central bank watch: the Reserve Bank of New Zealand (RBNZ) has cut its benchmark interest rate more aggressively than expected, by 50 bps, to 2.5%.
• The RBNZ commented that it is open to further rate cuts as it becomes more concerned about the struggling economy.
• The Bank of Thailand is expected to cut its benchmark interest rate by 25 bps, to 1.25%.

• Minneapolis Fed President Neel Kashkari warned yesterday that aggressive interest rate cuts could risk stoking inflation. 
• He noted recent economic data as pointing to emerging signs of stagflation, with growth slowing while inflation remains persistent, particularly amid the impact of new tariffs.
• Kashkari added that it is still too early to tell whether the inflationary effects of the tariffs will prove to be “sticky” or merely transitory.
• Fed Governor Stephen Miran has said much of the uncertainty that weighed on businesses and consumers earlier this year has now eased. 
• He expressed optimism about the economic outlook, provided the Fed avoids the risk of keeping monetary policy overly restrictive.

• Despite the US government shutdown that began on 1 October, the FOMC minutes from the 16-17 September meeting are due for release today.
• While the minutes themselves are unaffected, the shutdown has delayed critical economic data releases, including the September jobs report, CPI, and trade balance figures.
• The FOMC minutes will be more intensely scrutinized than usual, as it offers insight into policymakers’ thinking amid a data blackout.
• The minutes will likely reveal how the Fed weighed labour market softness against persistent inflation, and whether members leaned toward further rate cuts this year.
• The shutdown has affected the Fed’s ability to assess current economic conditions because the Fed now has to rely on outdated, or incomplete, data.

• The Mortgage Bankers Association (MBA) is a private organization, and its weekly mortgage applications will not be affected by the US government shutdown.
• Last week’s release showed a 12.7% decline in applications, largely attributed to rising mortgage rates and a decline refinancing activity.
• The release of the federal budget balance for September, originally scheduled for today, will likely be delayed.
• The Bureau for Economic Analysis (BEA) has confirmed that all scheduled economic data releases are suspended until funding is restored.
• The budget balance is a key indicator of fiscal health; its delay reduces transparency for policymakers and investors.

• Locally, it’s a quiet day as far as data releases are concerned.

• Brent crude is up this morning, and down by 11.7% year-to-date.
• The gold price is up this morning, and up by 53.6% year-to-date.

• Brent crude oil is currently at $65.92/bbl; ($65.45/bbl*).
• Gold is at $4031/oz ($3984/oz*).
• SA CDS 164bps*, Brazil 134bps* and Turkey 259bps*.
• Yields: US 10yr at 4.12%*, German bund at 2.70%*, SA 10-year generic at 9.26%*, SA’s R2035 at 9.14%*.

* Denotes yesterday’s close.

Key events and data: 

• 13h00: US MBA mortgage applications (3 October)
• 20h00: US FOMC meeting minutes (17 September)
• 20h00: US Federal Budget balance (September) – may be delayed due to the US government shutdown 

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