In the loop

What you should know this morning:

• The rand is weaker this morning, at R16.63/$, after closing weaker yesterday (R16.61/$*).
• EM currencies were mixed yesterday; the ARS (+0.2%), COP (+0.1%) and IDR (+0.1%) were the biggest gainers; the PLN (-0.7%), RON (-0.7%) and BRL (-0.7%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• Iran war: Iran has kept up the pressure by making contingent a full reopening of Hormuz on concessions from Washington.
• The US continued to pursue a negotiated solution alongside efforts to deter further disruptions to regional energy supplies.
• At the same time, fighting involving Iranian-aligned forces in Yemen and security concerns across key shipping routes highlighted the risk that the conflict could still broaden despite ongoing diplomatic engagement.

• Central bank watch: the minutes of the 15-16 September US FOMC meeting indicated policymakers having little appetite for a sustained series of interest rate hikes. 
• Fed policymakers were unanimous in raising the Fed funds rate by 25 bps, to 3.75-4.00%.
• However, many viewed the move as insurance against persistent inflation, rather than the start of a renewed tightening cycle.
• Only a smaller group believed the increase was necessary to actively combat inflation.
• Most policymakers judged that one additional 25 bps hike would likely be appropriate before year-end, while stressing that no decision had been made. 
• Policymakers generally believed that inflation was easing, expecting the September increase, the Fed's first interest rate hike since July 2023, to boost the return towards target. 
• Markets, however, are currently pricing in more monetary tightening than indicated by the Fed's projections.

• The NY Fed's September Survey of Consumer Expectations showed that one-year-ahead inflation expectations rose sharply, to 3.9% in September, from 3.6% in August, the highest since May 2023. 
• The increase reflected growing concerns about near-term price pressures, with households expecting higher price increases across all major categories tracked by the survey. 
• Inflation expectations also edged higher, to the three-year horizon of 3.3% in September, from 3.2% in August. 
• Five-year expectations remained unchanged, at 3.0%.

• The UK housing market showed tentative signs of deterioration in September, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey. 
• The house price balance fell to -32% in September, from -28% in August.
• This deterioration signals renewed downward pressure on house prices. 
• The decline ended four consecutive months of improvement, as rising interest rate expectations and higher borrowing costs weighed on buyer confidence and housing market activity. 
• New buyer enquiries weakened to -22% in September, from -18% in August, while agreed sales declined to -18% in September, from -16% in August. 

• Locally, manufacturing production for August is due out today; production likely increased by 0.4% y/y in August, following a 1.1% y/y increase in July. 
• Production increased by 2.2% m/m in July.

• Brent crude is up this morning, and up by 68.5% year-to-date.
• The gold price is up this morning, and down by 4.4% year-to-date.

• Brent crude oil is currently at $102.50/bbl; ($100.20/bbl*).
• Gold is at $4128/oz ($4111/oz*).
• SA CDS 136bps*, Brazil 111bps* and Turkey 250bps*.
• Yields: US 10yr at 5.30%*, German bund at 3.47%*, SA 10-year generic at 9.03%*, SA's R2035 at 8.81%*.

* Denotes yesterday's close. 

Key events and data:

• 13h00: SA manufacturing production (August)
• 14h30: US initial jobless claims (3 October)

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