In the loop 02 May 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.56/$, after closing stronger yesterday (R18.65/$*).
EM currencies were mixed yesterday; the ZAR (+0.8%), MXN (+0.4%) and HUF (+0.3%) were the biggest gainers; the RUB (-0.4%), TRY (-0.3%) and PLN (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

According to Nationwide, UK house prices declined by 0.4% m/m in April (the second consecutive decline), after having fallen by 0.2% m/m in March.
On a y/y basis, prices were up by 0.6% in April, following a 1.6% increase in March.
The average cost of a home is now at £261,962 ($326,680); this is about 4% below the peak in late 2022.
Higher interest rates have impacted consumers’ affordability to buy property and have held back the recovery from last year’s slump.

ECB Governing Council member Pablo Hernandez de Cos noted yesterday that the ECB is increasingly confident that inflation will moderate towards the bank’s 2% target soon.
His comments add to a string of comments from policymakers that the ECB will likely cut rates at the June monetary policy meeting.

The US Job Openings and Labour Turnover Survey (JOLTS) job openings came in lower than expected in March.
Job openings fell to 8,488k (a three-year low) in March, from an upwardly revised 8,813k in February.
The data points to the type of cooling in the labour market that the Fed would like to see.
The private payrolls report, also out yesterday, however, pointed to robust demand for workers across multiple industries.
The private sector ADP employment report, the precursor to the non-farm payrolls report, saw payrolls increase by 192k in April, from a 208k increase in March.
The non-farm payrolls (NFP) report for April is due out tomorrow; NFP are expected to have slowed, to 240k, following an increase of 303k in March.

The US FOMC kept the Fed funds rate unchanged yesterday, as expected, in a range of 5.25%-5.5%.
The Fed cited the "lack of further progress" toward lowering inflation, despite inflation having decreased over the past year, as the primary reason for holding rates steady.
The committee said that it does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
The FOMC, however, noted that there are signs that economic activity has continued to grow at a "solid" pace, while job increases have remained strong.
It also added that it will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities to $25bn from $60bn.

The US trade balance data for March, due out today, could see the trade deficit widening.
The deficit is expected to have widened to $69.7bn in March, from $68.9bn in February.

Locally, the BER manufacturing PMI for April is likely to have increased to 50.5, from 49.2 in March.
The April Naamsa vehicle sales are also due out today; vehicle sales are likely to have declined by 7.5% y/y in April, after having declined by 11.7% y/y in March.
Electricity production and consumption for March are scheduled for release today.

Brent crude oil is currently at $83.95/bbl; ($83.44/bbl*).
Gold is at $2314/oz ($2303/oz*).
SA CDS 245bps*, Brazil 150bps* and Turkey 300bps*.
Yields: US 10yr at 4.62%*, German bund at 2.58%**, SA 10-year generic at 11.98%**, SA’s R2030 at 10.66%**.

* Denotes yesterday’s close.

** Denotes Tuesday’s close.

Key events and data:

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