In the loop 09 April 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R19.78/$, after closing weaker yesterday (R19.64/$*).
EM currencies were mixed yesterday; the PLN (+0.5%), CZK (+0.3%) and PHP (+0.2%) were the biggest gainers; the IDR (-2.8%), THB (-1.7%) and BRL (-1.6%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Central bank watch: The Reserve Bank of New Zealand (RBNZ) today cut its benchmark interest rate by 25 bps, to 3.5%.
The RBNZ noted that it is ready to step up the pace of easing on the back of the US’s reciprocal tariff announcement last week.
The central bank noted significant downside risks to global growth and the outlook for domestic inflation.

BOE Deputy Governor Clare Lombardelli warned that tariffs will depress UK economic growth.
She added that the impact of these tariffs on inflation is unclear.
Lombardelli indicated that policymakers will consider heightened uncertainty and weakening growth when they decide whether to cut interest rates again.

President Trump yesterday indicated that he would proceed with implementing tariffs, of 104%, on many Chinese goods today.
These tariffs include previous levies applied because of the fentanyl crisis, Trump’s reciprocal tariffs, as well as an additional retaliation announced (of 50%) after China said it would tax US exports to China.
China has signalled it would not back down from a trade war.

Chicago Fed President Austan Goolsbee commented that Fed policymakers may not be able to wait for the economic impact of tariffs to reflect in the data.
He urged that policymakers should instead take active steps to gauge the effects in real time.
He added that businesses are already reporting anxiety and uncertainty about what tariffs will look like in the economy.
Businesses are challenged with how much of the tariff costs they would be able to pass on to consumers.
They are particularly concerned about how fast prices will likely increase.

San Francisco President Mary Daly remarked that the Fed can take its time before making any adjustments to interest rates.
Daly said that it would be best to wait and see how trade policy changes play out.
She noted that policy is in a good place to stay modestly restrictive, “but not so restrictive that the economy is vulnerable”.

The minutes of the Fed’s FOMC meeting (18-19 March) is in the spotlight today.
The markets will keep a close eye on clues for when the FOMC might cut rates again.
The minutes are likely to show that the majority of FOMC policymakers were more worried about the persistence of inflation.
Fed Chair Jerome Powell commented that the Trump administration’s new tariffs are “significantly larger than expected,” and their inflation impact “could be more persistent”.
The Fed chair is faced with the challenge of cutting interest rates further to prevent a sharp economic slowdown, or to keep them at the current level to pre-empt a surge in inflation.
Markets are expecting further rate cuts.

Brent crude oil is currently at $60.46/bbl; ($62.82/bbl*).
Gold is at $3014/oz ($2986/oz*).
SA CDS 265bps*, Brazil 198bps* and Turkey 348bps*.
Yields: US 10yr at 4.29%*, German bund at 2.63%*, SA 10-year generic at 10.97%*, SA’s R2035 at 10.95%*.

* Denotes yesterday’s close.

Key events and data:

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