In the loop 08 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.54/$, after closing weaker yesterday (R18.48/$*).
EM currencies were mixed yesterday; the KRW (+0.2%), COP (+0.2%) and BGN (+0.2%) were the biggest gainers; the CLP (-0.7%), THB (-0.3%) and HUF (-0.2%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Minneapolis Fed President Neel Kashkari noted an interest rate cut by the Fed this year as "certainly still a possibility".
He added that it is too soon to say that inflation progress has stalled.
Kashkari highlighted that if inflation trended sideways and the labour market remained strong, the Fed should hold rates steady at the current level.
He reiterated Fed Chair Jerome Powell’s earlier comments that, if price pressures start to slip again or there was a "marked weakening" in the labour market, the Fed could consider cutting interest rates.
Kashkari expects the Fed funds rate to remain where it is “for an extended period of time” until such a time that policymakers are certain about inflation being on track to return to the bank’s target.

ECB Governing Council member Joachim Nagel commented yesterday that “forces including geopolitics and decarbonization could keep consumer-price growth elevated in the years ahead”.
He also cited demographic trends that may lead to “persistently higher wage growth”.
The ECB is largely expected to start its interest rate cutting cycle as early as June.

Sweden’s Riksbank will meet today and is expected to cut its benchmark interest rate by 25 bps, to 3.75%.
The Riksbank signalled an almost even split likelihood between a May and June rate cut at its last meeting in March.
Sweden’s headline inflation surprised to the downside in Match, supporting the case for the central bank to start its rate cutting cycle.

German industrial production is likely to have fallen by 0.7% m/m in March, after having increased by 2.3% m/m in February.
On a y/y basis, production is likely to be down by 3.6% in March, following a 4.9% decline in February.

Locally, gross and net reserves for April are scheduled for release today.
Gross reserves were at $62.32 in March, while net reserves were at $57.51 in March.

Brent crude oil is currently at $82.68/bbl; ($83.16/bbl*).
Gold is at $2320/oz ($2312/oz*).
SA CDS 225bps*, Brazil 136bps* and Turkey 282bps*.
Yields: US 10yr at 4.45%*, German bund at 2.42%*, SA 10-year generic at 11.83%*, SA’s R2030 at 10.58%*.

* Denotes yesterday’s close.

Key events and data:

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