In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.36/$, after closing weaker yesterday (R16.42/$*).
• EM currencies were mixed yesterday; the COP (+2.4%), ARS (+0.6%) and MXN (+0.3%) were the biggest gainers; the THB (-0.8%), RUB (-0.7%) and KRW (-0.5%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• President Trump yesterday renewed his attacks on Fed Chair Jerome Powell. 
• Trump accused Powell of being “billions of dollars over budget” and suggested that Powell is “either incompetent or crooked”. 
• The remarks follow a Justice Department probe into the renovation of the Fed’s headquarters. 
• Powell has dismissed the renovation inquiry as a “pretext” for a wider pressure campaign aimed at influencing interest rate policy.
• In response, eleven central bank leaders, including those from the ECB, the BOE and the Bank of Canada, said they “stand in full solidarity” with the Fed and Powell.

• Richmond Fed President Tom Barkin said businesses are still passing tariff-related price increases on to consumers. 
• However, he noted that firms are more confident about the range of tariffs today than they were a year ago. 
• Barkin added that, while inflation remains above the Fed’s target, it is moving in the right direction. 
• Barkin also noted recent employment data as pointing to modest job growth and a continued low-hiring environment. 
• Figures from the Bureau of Labor Statistics (BLS) released last week showed that employers added 50,000 jobs last month, while the unemployment rate edged down to 4.4%.

• St. Louis Fed President Alberto Musalem said inflation risks are moderating and that he expects price pressures to converge toward the Fed’s target later this year. 
• He added that monetary policy is well positioned to respond to risks to either price stability or employment. 
• He noted that interest rates are now around the neutral level. 
• Fed policymakers have signalled they are likely to hold interest rates steady this month after cutting the Fed funds rate last year.

• US new home sales declined in October, by 0.1% m/m (to 737k annualised), after having increased by 3.8% m/m (738k annualised) in September.
• Existing home sales for December are on the cards today and are expected to have increased by 2.2% m/m, following a 0.5% m/m rise in November. 
• The Bureau for Labor Statistics (BLS) will publish both the October and November PPI today, following the disruption of the October data collection on the back of the government shutdown.
• PPI is likely to come in at 2.7% y/y in November.
• Retail sales for November, also scheduled for release today, are likely to have increased by 0.4% m/m in November, after having flatlined in October.
• Sales are likely to have been supported by a modest rebound in car sales following October’s steep decline tied to the expiration of the $7500 electric vehicle tax credit.

• Locally, there are no economic data releases scheduled for today.

• Brent crude is down this morning, and up by 7.3% year-to-date.
• The gold price is up this morning, and up by 7.3% year-to-date.

• Brent crude oil is currently at $65.27/bbl; ($65.47/bbl*).
• Gold is at $4633/oz ($4586/oz*).
• SA CDS 135bps*, Brazil 138bps* and Turkey 217bps*.
• Yields: US 10yr at 4.17%*, German bund at 2.84%*, SA 10-year generic at 8.43%*, SA’s R2035 at 8.29%*.

* Denotes yesterday’s close.

Key events and data: 

• 08h00: Japan machine tool orders (December)
• 14h00: US MBA mortgage applications (9 January)
• 15h30: US PPI (October and November), retail sales (November), current account balance (Q3:25)
• 17h00: US existing home sales (December)

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