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In the loop 09 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is unchanged this morning, at R18.57/$, after closing weaker yesterday (R18.57/$*).
  • EM currencies were mixed yesterday; the MXN (+0.1%), HKD (+0.1%) and TRY (+0.1%) were the biggest gainers; the ZAR (-0.5%), BRL (-0.4%) and COP (-0.3%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • China’s exports increased more than expected in April, by 1.5% y/y, after having declined by 7.5% y/y in March.
  • Imports surged by 8.4% y/y in April, following a 1.9% y/y decline in March.
  • The trade surplus widened to $72.35bn in April, from $58.55bn in March.
  • The data implies global demand as improving, providing a boost to China’s growth.
  • Boston Fed President Susan Collins commented yesterday that reaching the Fed’s 2% inflation goal may take longer than previously expected.
  • Collins signalled that interest rates may need to be held at a two-decade high for longer to dampen demand and reduce price pressures. 
  • She highlighted the lack of disinflationary progress made thus far in 2024.
  • She admitted that it wasn’t surprising to see bumps in the disinflation process.
  • Collin’s noted that slower economic growth may be necessary to ensure inflation returning to the Fed’s target.
  • The UK’s BOE’s monetary policy meeting is in the spotlight today; the central bank is largely expected to keep its benchmark interest rate unchanged, at 5.25%.
  • Investors will keep a close eye on comments from the governor for clues on when the bank may start its rate cutting cycle. 
  • With inflation set to fall close to 2% imminently, the policy decision may see more votes for a cut at this meeting.
  • The central bank will also publish new forecasts on inflation and growth. 
  • Bank Negara Malaysia will meet today and is expected to keep its policy rate steady, at 3.0%.
  • Rates currently appear to be at a neutral level, supporting the Malaysian economy without stoking inflation.
  • Locally, manufacturing production for March is expected to have increased by 0.8% y/y in March, after having increased by 4.1% y/y in February. 
  • On a m/m basis, manufacturing production is likely to have increased by 0.6% in March, following a decline of 0.3% in February.
  • Eskom: loadshedding remains suspended until further notice.
  • Brent crude is up this morning, and up by 9.0% year-to-date.
  • The gold price is up this morning, and up by 12.4% year-to-date.
  • Brent crude oil is currently at $83.94/bbl; ($83.58/bbl*).
  • Gold is at $2319/oz ($2317/oz*).
  • SA CDS 229bps*, Brazil 138bps* and Turkey 281bps*.
  • Yields: US 10yr at 4.49%*, German bund at 2.46%*, SA 10-year generic at 11.88%*, SA’s R2030 at 10.49%*.

* Denotes yesterday’s close.

Key events and data:

  • 09h00: Malaysia interest rate decision – no change expected
  • 13h00: SA manufacturing production (March)
  • 13h00: UK BOE interest rate decision – no change expected
  • 14h30: US initial jobless claims (4 May)
  • 15h00: UK BOE Decision Maker Panel (DMP) 3-month and 1-year inflation expectations (April)

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