In the loop

What you should know this morning:

• The rand is unchanged this morning, at R18.54/$, after closing stronger yesterday (R18.54/$*).
• EM currencies were mixed yesterday; the COP (+1.2%), ZAR (+0.9%) and PEN (+0.5%) were the biggest gainers; the RUB (-0.9%), CZK (-0.2%) and PLN (-0.1%) were the biggest losers.
• Asian equity markets: the Nikkei is up; Chinese markets are closed for the New Year holidays.

• Central bank watch: the US FOMC yesterday kept its Fed funds rate unchanged, as expected.
• The Fed cited wide uncertainty over President Trump’s policies, in areas such as immigration, tariffs, fiscal policy and regulation, as reasons for the pause. 
• The strong performance of the US economy and stability of the labour market also gave the Fed cause to hold rates steady.
• Fed Chair Jerome Powell noted that the Fed will hold interest rates steady for the foreseeable future due to uncertainty over President Trump's policies and their likely impact on the economy.
• Powell added that rates are still “meaningfully” above the neutral rate.

• The Bank of Canada trimmed its benchmark interest rate by 25 bps, to 3.0%, yesterday.
• The central bank declined giving guidance on the future path of rates due to the uncertainty over US tariffs.
• The bank noted the threat of such tariffs as clouding the economic outlook.
• The Brazilian central bank hiked the Selic rate by 100 bps, to 13.25%.
• The bank signalled another rate hike as likely at the March policy meeting.

• The ECB is due to make a policy announcement later this afternoon; the central bank is expected to cut its benchmark interest rate by 25 bps.

• The SARB will meet today and is largely expected to cut the repo rate by 25 bps, to 7.50%. 
• The MPC will likely be more hawkish than at its previous interest rate meeting (in November 2024), given the rand’s depreciation, as well as generally less dovish expectations for US interest rate cuts.
• The increase in upside inflation forecast risks also increases the likelihood that the SARB might even pause during this monetary easing cycle.
• However, we still see the odds as tilted towards another rate cut at today’s MPC meeting.

• The Eurozone GDP for Q4:24 is scheduled for release; GDP is expected to have only posted 0.1% q/q growth in the final quarter, from 0.4% q/q in Q3:24.
• On a y/y basis, GDP is expected to come in at 1.0% in Q4:24, from 0.9% in Q3:24.
• Business surveys imply momentum as having faded during H2:24.
• Several other Eurozone economies’ GDP for Q4:24 are also on the cards.
• Economic and consumer confidence indices for January will likely show that confidence has improved across the board.
• Economic confidence is expected to have increased to 91.1 in January, from 93.7 in December.
• Consumer confidence for January (final estimate) is expected to have remained at -14.2, up from -14.5 in December.
• The unemployment rate for December is expected to have remained unchanged, at 6.3%.

• The US Q4:24 GDP is expected to come in at 2.6%% q/q in Q4:24, from 3.1% q/q in Q3:24.
• Real personal consumption expenditure likely recorded very strong growth in Q4:24.
• Residential investment is also expected to have contributed positively to the Q4:24 print on the back of increased demand for housing.
• However, housing affordability remains a hurdle.

• Locally, the M3 and private sector credit extension (PSCE) for December are due out today.
• PSCE is likely to come in at 4.13% y/y in December, from 4.16% y/y in November. 
• The December PPI is on the cards and is expected at 0.8% y/y, from -0.1% y/y in November. 
• The monthly Budget balance data for December is also due; the budget deficit came in at R4.5bn in November.

• Brent crude is down this morning, and up by 2.4% year-to-date.
• The gold price is up this morning, and up by 5.2% year-to-date.

• Brent crude oil is currently at $76.43/bbl; ($76.58/bbl*).
• Gold is at $2759/oz ($2752/oz*).
• SA CDS 195bps*, Brazil 178bps* and Turkey 259bps*.
• Yields: US 10yr at 4.52%*, German bund at 2.58%*, SA 10-year generic at 10.26%*, SA’s R2035 at 10.28%*.

* Denotes yesterday’s close. 

Key events and data:

• 08h00: SA M3 money supply and PSCE (December)
• 11h30: SA PPI (December)
• 11h30: UK consumer credit (December), M4 money supply (December)
• 12h00: Eurozone GDP (Q4:24), consumer and economic confidence (January), unemployment rate (December)
• 14h00: SA monthly Budget balance (December)
• 15h00: SA SARB interest rate decision – 25 bps cut expected
• 15h15: Eurozone ECB interest rate decision – 25 bps cut expected
• 15h30: US GDP (Q4:24), initial jobless claims (25 January)

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