In the loop

What you should know this morning:

• The rand is stronger this morning, at R18.41/$, after closing stronger yesterday (R18.46/$*).
• EM currencies were mixed yesterday; the MXN (+1.0%), COP (+0.8%) and PLN (+0.5%) were the biggest gainers; the THB (-0.6%), RUB (-0.5%) and PHP (-0.3%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• Central bank watch: the Bank of Japan (BOJ) today hiked its main interest rate by 25 bps, to 0.5%, as expected.
• The rate hike comes on the back of rising inflation and wages.
• The BOJ expects inflation to remain underpinned, around its annual target, in the coming years. 
• The central bank commented that if the outlook were realised, it would continue to raise the policy rate. 

• CPI in Japan came in higher than expected, at 3.6% y/y in December, from 2.9% y/y in November.
• CPI, excluding fresh food, came in at 3.0% y/y in December, from 2.7% y/y in November.
• This marked the highest annual pace of inflation in 16 months.
• Today’s data supported the case for the BOJ to hike its benchmark interest rate to 0.5%.
• Japan’s Jibun Bank manufacturing PMI fell to its lowest level in 10 months in January, to 48.8, from 49.6 in December.

• Eurozone and UK flash PMI data for January are due out today, providing an indication of how economic growth has been developing in Q1:25.
• The Eurozone PMI will be watched closely to see whether the December rebound was a short-lived bounce, or extended into 2025.
• The UK composite PMI is likely to edge down in January as the recent financial market turmoil weighs on sentiment.
• The UK GfK consumer confidence index dropped to the lowest in more than a year in January, to -22, from -17 in December.
• The outlook survey also worsened from December.

• In his virtual address to global leaders in Davos, US President Trump noted that he would mandate the Fed to lower interest rates imminently.
• Trump added that the US administration would request Saudi Arabia and OPEC to cut the price of oil.
• He remarked that the US would be the world capital of artificial intelligence and cryptocurrency.
• This as he continued his promises of tariffs on products made outside of the US. 
• He also remarked that he would “rather not” have to impose tariffs on China.
• Attendees at WEF have been in discussion regarding the impact of President Trump’s return to the White House on global affairs.

• US existing home sales will likely have increased by 1.2% m/m in December, after having increased by 4.8% m/m in November.
• The University of Michigan sentiment (final estimate) index for January is due; the sentiment index is likely to have remained unchanged from its previous estimate, at 73.2.
• The US flash PMI data for January are also scheduled for release; the manufacturing PMI is expected to have improved in January, while the services PMI is expected to have slipped.

• Locally, it’s as quiet day.

• Brent crude is down this morning, and up by 4.8% year-to-date.
• The gold price is up this morning, and up by 5.7% year-to-date.

• Brent crude oil is currently at $78.22/bbl; ($78.29/bbl*).
• Gold is at $2774/oz ($2757/oz*).
• SA CDS 194bps*, Brazil 178bps* and Turkey 265bps*.
• Yields: US 10yr at 4.64%*, German bund at 2.55%*, SA 10-year generic at 10.35%*, SA’s R2035 at 10.37%*.

* Denotes yesterday’s close. 

Key events and data:

• 11h00: Eurozone HCOB manufacturing, services and composite PMI (January)
• 11h30: UK S&P Global manufacturing, services and composite PMI (January)
• 16h45: US S&P Global manufacturing, services and composite PMI (January)
• 17h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (January – final), existing homes sales (December)

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