In the loop 02 April 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.53/$, after closing weaker yesterday (R18.45/$*).
EM currencies were mixed yesterday; the COP (+0.9%), CLP (+0.5%) and MXN (+0.4%) were the biggest gainers; the RUB (-1.8%), THB (-0.5%) and ZAR (-0.5%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

BOE policymaker Megan Greene yesterday remarked that rising inflation expectations in the UK economy are a concern for the central bank.
Greene added that, while the disinflation process is underway, she is concerned about wage growth, which is not moderating as quickly as she had expected.
Greene noted that wage growth remains above what the BOE’s models can explain, which suggests that “there might be some supply issues”.
She also noted that the risks to gas prices are on the upside.
As such, certain indicators, such as the saving rate, suggest that monetary policy remains restrictive.

Richmond Fed President Tom Barkin noted that President Trump’s tariffs could raise both inflation and unemployment.
This is expected to make the Fed’s monetary policy decisions very challenging.
Barkin said that a price shock of this nature could result in a “cage match” between a frustrated consumer and providers of goods and services passing on price increases.
Barkin also warned that some of the price increases will likely be felt in the jobs market.
He added that uncertainty is very high over what policies will actually be implemented.

Investors are keeping a close eye on the expected announcement by US President Donald Trump regarding reciprocal tariffs today.
The US private sector ADP employment report for March, a precursor to the non-farm payrolls (NFP) report, is scheduled for release today.
Private sector payrolls are likely to have increased by 120k in March, from 77k in February.
NFP, due out on Friday, likely increased by 140k in March, from 151k in February.
The unemployment rate is likely to have remained unchanged, at 4.1%, in March.
Factory orders for February are also on the cards today and are expected to have increased by 0.5% m/m, after having increased by 1.7% m/m in January.

Locally, it’s a quiet day as far as data releases are concerned.
An SA parliamentary panel yesterday approved the fiscal framework that underpins the national budget, provided that Finance Minister Enoch Godongwana review his tax proposal.
The panel has requested that the minister reconsider the VAT increase and try to find other ways to raise revenue.
Lawmakers are expected to vote on the framework later today; the risk is that parties may still not support the budget without amendments.

Brent crude oil is currently at $74.48/bbl; ($74.49/bbl*).
Gold is at $3114/oz ($3106/oz*).
SA CDS 228bps*, Brazil 185bps* and Turkey 316bps*.
Yields: US 10yr at 4.19%*, German bund at 2.68%*, SA 10-year generic at 10.60%*, SA’s R2035 at 10.59%*.

* Denotes yesterday’s close.

Key events and data:

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