In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is weaker this morning, at R17.43/$, after closing stronger yesterday (R17.38/$*).
- EM currencies were mixed yesterday; the ZAR (+0.6%), KRW (+0.3%) and BGN (+0.1%) were the biggest gainers; the MYR (-1.5%), IDR (-1.2%) and THB (-1.2%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.
- ECB Governing Council member Robert Holzmann noted yesterday that the central bank should not declare victory over inflation prematurely as underlying price pressures remain high.
- He said that “inflation is on the right track — but it isn’t defeated”.
- He added that one of the main drivers of moderating inflation is falling energy costs.
- CPI is currently below the ECB 2% target for the first time since 2021; the central bank is largely expected to cut interest rates for a third time next week.
- German industrial production for August is scheduled for release today; recent sentiment data has pointed to bleak near-term prospects, especially in the industrial sector.
- Industrial production is expected to have increased by 0.8% m/m in August, after having declined by 2.4% m/m in July.
- On a y/y basis, production is expected to have declined by 3.8% in August, following a 5.3% decline in July.
- Industrial production has been affected by weak global demand, high energy prices, and tight financing conditions.
- The US NFIB small business optimism index for September, due out today, is likely to have improved to 92.0, from 91.2 in August.
- In August, a net 13% of business owners reported that they planned to hire in the next three months.
- The measure remains below the pre-pandemic average when a net 19% of business owners said they planned to hire in the next three months at that time.
- Small businesses still seem to be competing for talent; large business seem to be hiring more.
- The US trade balance data for August is expected to reflect a narrowing deficit, to $70.5bn, from a deficit of $78.8bn in July.
- The advance goods trade balance data has shown that imports fell in August, led by a decline in industrial supplies and automotive imports.
- Minneapolis Fed President Neel Kashkari commented yesterday that the balance of risks has shifted away from higher inflation towards higher unemployment.
- New York President John Williams noted that the Fed is “well positioned” for a soft landing.
- He expressed his preference to move interest rates to a “neutral” setting that no longer dampened demand “over time”.
- St. Louis Fed President Alberto Musalem warned against easing interest rates too quickly.
- Several US policymakers are due to make comments on the economy and monetary policy today.
- Locally, it’s a quiet day as far as data releases are concerned.
- Brent crude is down this morning, and up by 3.5% year-to-date.
- The gold price is down this morning, and up by 28.2% year-to-date.
- Brent crude oil is currently at $79.77/bbl; ($80.93/bbl*).
- Gold is at $2644/oz ($2646/oz*).
- SA CDS 180bps*, Brazil 145bps* and Turkey 278bps*.
- Yields: US 10yr at 4.02%*, German bund at 2.25%*, SA 10-year generic at 10.37%*, SA’s R2035 at 10.44%*.
* Denotes yesterday’s close.
Key events and data:
- 08h00: Germany industrial production (August)
- 12h00: US NFIB small business optimism (August)
- 14h30: US trade balance (August)
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