In the loop

What you should know this morning:

• The rand is weaker this morning, at R16.56/$, after closing stronger yesterday (R16.53/$*).
• EM currencies were mixed yesterday; the COP (+0.5%), ARS (+0.3%) and CLP (+0.3%) were the biggest gainers; the PHP (-0.9%), THB (-0.5%) and RUB (-0.5%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

• Iran war: over the past two days, the US confirmed that it was actively reviewing an Iranian proposal to reopen the Strait of Hormuz in return for Washington lifting its naval blockade.
• However, President Trump has made it clear that he was dissatisfied with the offer.
• As a result, prospects for a near-term agreement have dimmed, with Pakistan-mediated talks having stalled, and no acceptance of Tehran's proposal by Washington.

• Central bank watch: the US Fed is set to announce its policy decision today and is widely expected to leave the Fed funds rate on hold. 
• Policymakers will be particularly alert to any signs that inflation expectations are becoming unanchored.
• Geopolitical developments since the mid-March FOMC meeting have led policymakers to adopt a more cautious stance, particularly when it comes to providing guidance on the path of interest rates. 
• Fed Chair Jerome Powell is expected to offer only limited signals on policy at his final press conference as chair, ahead of the conclusion of his term on 15 May. 
• Kevin Walsh is currently on track to be confirmed as his successor.
• The Bank of Canada is expected to keep its overnight rate target steady, at 2.25%, when its Governing Council meets later today.
• The Bank of Thailand is also likely to maintain its benchmark rate, at 1.00%, today.

• The US Conference Board's consumer confidence index overshot expectations in April; the confidence index increased to 92.8, from 92.2 in March.
• The modest improvement in sentiment, despite ongoing concerns about elevated costs and the conflict involving Iran, may reflect a fragile ceasefire between the US and Iran, alongside tentative signs of stabilisation in the labour market. 
• Hiring rebounded in March, while more recent indicators suggest layoffs remain contained.
• Nonetheless, many consumers continue to express concern about job security and rising prices. 
• The expectations index for the next six months improved, even as the present conditions component edged lower.

• The US trade balance for March is scheduled for release today.
• The trade deficit is likely to have widened, to $88.0bn in March, from $83.5bn in February.
• US housing starts and building permits data for March will be released today.
• Housing starts are likely to have fallen by 4.5% m/m in January, after having increased by 6.2% m/m in December.
• Building permits are also expected to have fallen in January, by 3.1% m/m.

• Locally, it's a quiet day as far as data releases are concerned.

• The oil price increased above $110/bbl for the first time in three weeks yesterday.
• This came as limited progress in negotiations between the US and Iran dampened prospects for a near-term agreement that could restore energy flows through the Strait of Hormuz.
• Brent crude is down this morning, and up by 83.6% year-to-date.
• The gold price is down this morning, and up by 6.4% year-to-date.

• Brent crude oil is currently at $110.69/bbl; ($111.26/bbl*).
• Gold is at $4595/oz ($4596/oz*).
• SA CDS 157bps**, Brazil 124bps* and Turkey 246bps*.
• Yields: US 10yr at 4.34%*, German bund at 3.06%*, SA 10-year generic at 8.89%*, SA's R2035 at 8.74%*.

* Denotes yesterday's close.

Key events and data:

• 10h00: Eurozone M3 money supply (March)
• 11h00: Eurozone economic and consumer confidence (April)
• 13h00: US MBA mortgage applications (24 April)
• 14h30: US building permits (March), trade balance (March), housing starts (March), durable goods (March)
• 20h00: US Fed FOMC interest rate decision – no change expected

Read PDF