In the loop 06 November 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R17.68/$, after closing stronger yesterday (R17.37/$*).
EM currencies were mixed yesterday; the RUB (+1.1%), ZAR (+0.9%) and BRL (+0.7%) were the biggest gainers; the MXN (-0.4%), KRW (-0.3%) and CLP (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

Japan’s Jibun Bank services PMI slipped into contraction at 49.7 (final estimate) in October (up from a previous estimate of 49.3), from 53.1 in September.
The composite PMI also entered contraction in October; the final estimate for the month came in at 49.6, from a previous estimate of 49.4, and from 52.0 in September.
Some BOJ policymakers signalled scepticism about releasing a rate path projection similar to the Fed’s dot plot at their last policy meeting.
Several policymakers rejected the idea and noted the importance of reiterating the bank’s policy stance.
The minutes noted that “even if the bank provided numerical projections of the policy interest rate, the projections would inevitably range quite widely and therefore wouldn’t likely lead to effective communication”.

Central bank watch: the National Bank of Poland will likely keep the policy rate on hold at 5.75% today, extending the pause since the last cut in October 2023.
The central bank is largely expected to deliver rate cuts over the course of 2025.
Bank Negara Malaysia is likely to hold rates steady today, at 3.0%.
The policy rate is currently at its neutral level, which is supporting economic growth without fuelling price pressures.

The British Retail Consortium (BRC) noted yesterday that UK retail sales had undershot expectations in October, increasing by just 0.3% y/y, after having increased by 1.7% y/y in September.
Food sales growth remained relatively healthy, increasing by 2.9% y/y in the three months to October.
However, non-food sales declined by 0.1% y/y in the three months to October.
Ongoing concerns about consumers’ financial outlook kept demand for big-ticket items at bay.

All eyes will be on the initial results of the US election as they start trickling in today.
Candidates have contrasting views on trade policies, with Donald Trump notably campaigning on a main tariff proposal of 10% universal tariffs on all imports and a 60% rate on goods from China.
With the result likely coming down to votes in key highly-contested swing states, in which outcomes might be challenged, it is likely that the final outcome will only be known after some time.
The timing of the victory results will depend on how fast states count their ballots and how close the results are.

Brent crude oil is currently at $74.62/bbl; ($75.53/bbl*).
Gold is at $2740/oz ($2742/oz*).
SA CDS 193bps*, Brazil 167bps* and Turkey 269bps*.
Yields: US 10yr at 4.27%*, German bund at 2.42%*, SA 10-year generic at 10.50%*, SA’s R2035 at 10.56%*.

* Denotes yesterday’s close.

Key events and data:

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