In the loop

What you should know this morning:

• The rand is weaker this morning, at R17.35/$, after closing stronger yesterday (R17.29/$*).
• EM currencies were mixed yesterday; the COP (+2.4%), HUF (+2.0%) and MXN (+2.0%) were the biggest gainers; the RUB (-0.8%), THB (-0.4%) and BRL (-0.2%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

• The US FOMC yesterday cut the Fed funds rate by 25 bps, as expected, to a range of 4.5% to 4.75%; the decision was unanimous.
• The FOMC noted that it “judges that the risks to achieving its employment and inflation goals are roughly in balance”.
• However, the central bank highlighted that the economic outlook remains uncertain. 
• The FOMC is therefore “attentive to the risks to both sides of its dual mandate”.
• Several Fed policymakers recently expressed their support for a more measured and careful approach to rate cuts.
• US Fed Chair Jerome Powell noted that “this further recalibration of our policy stance will help maintain the strength of the economy and the labour market”.
• This will ensure further progress on inflation towards the bank’s target as the “bank moves to a neutral policy stance over time”.
• Powell also commented that he is ready to defend the Fed from political pressure following the re-election of Donald Trump.

• The US University of Michigan sentiment index for November is due out today and is likely to have increased to 71.0, from 70.5 in October.
• The 1-year inflation expectations measure is expected to have remained unchanged, at 2.7%, in November.
• 5-10-year inflation expectations are also likely to have remained unchanged in November, at 3.0%.

• ECB Governing Council member Yannis Stournaras commented yesterday that, should Donald Trump implement the tariffs, fiscal policy and migration policies proposed in his election campaign, it would have “certain implications” for the Eurozone economy.
• He noted that “it’ll have a negative impact on the European economy, but also there will be some implications in the exchange rate”.
• Stournaras expects a weaker Eurozone economy in the short term.
• The Trump proposals may also have an impact on Eurozone monetary policy.

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

• Brent crude is down this morning, and down by 2.4% year-to-date.
• The gold price is down this morning, and up by 30.6% year-to-date.

• Brent crude oil is currently at $75.19/bbl; ($75.63/bbl*).
• Gold is at $2694/oz ($2699/oz*).
• SA CDS 182bps*, Brazil 151bps* and Turkey 254bps*.
• Yields: US 10yr at 4.32%*, German bund at 2.44%*, SA 10-year generic at 10.33%*, SA’s R2035 at 10.38%*.

* Denotes yesterday’s close. 

Key events and data:

• 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (November)

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