In the loop 11 February 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is unchanged this morning, at R18.45/$, after closing weaker yesterday (R18.45/$*).
EM currencies were mixed yesterday; the RUB (+0.5%), BRL (+0.4%) and CLP (+0.3%) were the biggest gainers; the THB (-0.8%), MYR (-0.7%) and MXN (-0.6%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

ECB President Christine Lagarde yesterday commented that, while disinflation in the Eurozone is on track, global trade frictions continue to pose risks.
Lagarde stated that inflation is expected to meet the ECB’s 2% target this year.
She nonetheless warned of a “challenging” economic environment ahead.
Lagarde remarked that “greater friction in global trade would make the euro area inflation outlook more uncertain”.
The ECB is largely expected to cut its benchmark interest rate when it meets next month.

The European Commission and EU national leaders commented yesterday that Europe would not hesitate to retaliate if President Trump imposed new tariffs.
US President Donald Trump has repeatedly threatened to impose tariffs against the US’s largest trading partners.
Trump announced that he would impose 25% tariffs on all steel and aluminium imports that would affect “everybody”.
The EU noted that it “will react to protect the interests of European businesses, workers and consumers from unjustified measures”.
German Chancellor Olaf Scholz commented yesterday that Europe would be prepared to respond “within an hour” if the US levied tariffs against the EU.

The Fed Bank of New York survey showed that the US consumer inflation expectations (one-year ahead) remained steady in January, at 3.0%.
The survey noted that average household spending growth expectations declined to 4.4% in January, from 4.8% in December.
Year-ahead commodity price expectations rose across the board.

US Fed Chair Jerome Powell is scheduled to deliver his semi-annual monetary policy testimony to the Senate Banking Committee today.
The Fed Chair will likely face a series of questions, which may include the impact of President Trump’s tariffs on the economy and monetary policy.
The NFIB small business optimism index for January, also due out today, is likely to have slipped, albeit remaining high.
The index is expected to have slipped to 104.7 in January, from 105.1 in December.

Locally, manufacturing production for December is due out today; production is expected to have declined by 1.6% y/y, after having fallen by 2.6% y/y in November.
On a m/m basis, manufacturing production is likely to have decreased by 0.3% in December, following a 1.1% decrease in November.

Brent crude oil is currently at $76.14/bbl; ($75.87/bbl*).
Gold is at $2919/oz ($2903/oz*).
SA CDS 203bps*, Brazil 173bps* and Turkey 253bps*.
Yields: US 10yr at 4.49%*, German bund at 2.36%*, SA 10-year generic at 10.46%*, SA’s R2035 at 10.47%*.

* Denotes yesterday’s close.

Key events and data:

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