In the loop 20 November 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.06/$, after closing weaker yesterday (R18.05/$*).
EM currencies were mixed yesterday; the MXN (+0.8%), THB (+0.6%) and TWD (+0.5%) were the biggest gainers; the ZAR (-0.6%), PLN (-0.5%) and RUB (-0.5%) were the biggest losers.
Asian equity markets are mixed today; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

Central bank watch: China’s banks kept their loan prime rates unchanged today.
Bank Indonesia is also likely to keep rates unchanged today.

The ECB’s indicator of negotiated wage rates will provide an estimate of the increase in pay settlements for this region in Q3:24.
Negotiated wages increased by 3.5% in Q2:24, from 4.8% in Q1:24.
Pay settlements have been the chief driver of overall wage growth recently.
Negotiated wages are key in assessing the second-round effects of high inflation.
However, this excludes bonuses, overtime pay, salary increases offered to new or promoted employees, and other compensation linked to the collective bargaining process.

UK CPI is scheduled for release today and is expected at 2.2% y/y in October, from 1.7% y/y in September.
A rise in household energy bills is likely to have pushed headline inflation up in October.
Core CPI is expected at 3.1% y/y in October, from 3.2% y/y in September.
Services inflation, a key metric for the BOE, is expected to have held steady in October, at 4.9%.
The UK house price index for September is also scheduled for release today.

Kansas City Fed President Jeff Schmidt reiterated his view that it’s uncertain how much more the Fed would need to cut the Fed funds rate.
He noted that “while now is the time to begin dialling back the restrictiveness of monetary policy”, it remains to be seen where interest rates might eventually settle.
Schmidt added that three long-term trends are likely to shape the environment for monetary policy: higher productivity growth, an aging workforce, and an increase in government debt.
He said that the recent rate cuts were an acknowledgement of the FOMC’s growing confidence that inflation will reach the Fed’s 2% target.

Locally, CPI for October is scheduled for release today and is expected at 3.0% y/y, from 3.8% y/y in September.
On a m/m basis, CPI is expected to have increased by 0.1% in October, matching September’s increase.
Core CPI is likely to come in at 3.9% y/y in October, from 4.1% y/y in September.
Retail sales for September, also due out today, is expected to have decreased by 2.7% y/y, following 3.2% y/y in August.
The BER’s business confidence index for Q4:24 is also on the cards.

Brent crude oil is currently at $73.30/bbl; ($73.31/bbl*).
Gold is at $2638/oz ($2628/oz*).
SA CDS 190bps*, Brazil 165bps* and Turkey 264bps*.
Yields: US 10yr at 4.39%*, German bund at 2.33%*, SA 10-year generic at 10.33%*, SA’s R2035 at 10.37%*.

* Denotes yesterday’ close.

Key events and data:

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