In the loop 23 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.84/$, after closing weaker yesterday (R18.85/$*).
EM currencies were mixed yesterday; the MXN (+0.2%), COP (+0.1%) and THB (+0.1%) were the biggest gainers, the ZAR (-1.4%), KRW (-0.9%) and IDR (-0.9%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

Several central banks will be meeting today to decide on rates.
Sweden’s Riksbank is likely to keep rates on hold, at 4.0%; there is, however, still a risk of the central bank opting for a final 25 bps hike to support the krona.
Turkey’s central bank will likely hike its benchmark interest rate by 250 bps, to 37.5%.
This would add to the cumulative lift of 2,650 bps in rates since May’s presidential and parliamentary elections.

The ECB’s October monetary policy meeting minutes will be in focus today.
Investors will keep a close watch for any lingering support for additional tightening.
The ECB left its benchmark interest rates unchanged in October from September, suggesting that its hiking cycle has come to an end.
The ECB noted at that meeting that, at current levels, if maintained for sufficiently long, it would aid in returning inflation to the bank’s target.

The Eurozone HCOB manufacturing, services and composite PMI for November will provide further insight into the extent to which downside risks to the economy from monetary tightening have been materialising.
The manufacturing PMI is likely to have increased in November, albeit remaining in negative territory.
The services PMI is seen increasing closer to the 50pt benchmark, to 48.1 in November.

The UK S&P Global/CIPS manufacturing, services and composite PMI for November are also due out today.
The composite PMI is expected to remain in recessionary territory for a fourth consecutive month in November.
Both the manufacturing and services PMIs are likely to come in below 50pts in November.

Locally, the SARB will be announcing its interest rate decision today; it is largely expected to keep the repo rate unchanged, at 8.25%.
This is despite inflation overshooting consensus expectations in October, at 5.9% y/y, from 5.4% y/y in September.
We’ll keep a close watch on changes to the SARB’s GDP and inflation forecasts.
The SARB currently expects GDP to come in at 0.7% in 2023, while CPI is likely to average 5.9% this year.
Eskom: Stage 4 loadshedding is currently in place until further notice.

Brent crude oil is currently at $80.98/bbl; ($81.96/bbl*).
Gold is at $1995/oz ($1991/oz*).
SA CDS 243bps*, Brazil 148bps* and Turkey 341bps*.
Yields: US 10yr at 4.40%*, German bund at 2.56%* and SA 10-year generic at 11.34%*, SA’s R2030 at 10.10%*.

* Denotes yesterday’s close.

Key events and data:

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