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In the loop 09 November 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.47/$, after closing weaker yesterday (R18.46/$*).
  • EM currencies were mixed yesterday; the PLN (+0.8%), RUB (+0.4%) and CZK (+0.3%) were the biggest gainers, the CLP (-1.9%), COP (-0.6%) and BRL (-0.6%) 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 National Bank of Poland (NBP) has kept it benchmark interest rate unchanged, at 5.75%, against expectations for a 25 bps cut.
  • Governor Adam Glapinski had signalled last month that rate cuts would continue; he noted borrowing costs as “still high.” 
  • The decision to hold rates steady was possibly a political one; critics have accused the governor of trying to help the ruling party win the October election, after he delivered an unexpectedly steep rate cut in September.
  • The central bank published new economic projections and revised its inflation view for next year.
  • CPI is seen at 11.3%-11.5% in 2023, from 11.1%-12.7% in July; CPI for 2024 is expected to moderate to 3.2%-6.2%, from 3.7%-6.8% (July forecasts).
  • US Fed Chair Jerome Powell noted that the central bank must be willing to think beyond the complex mathematical simulations it traditionally uses to forecast the economy.
  • He added that “intellectual rigour has to be combined with flexibility and agility”.
  • Powell did not comment on the bank’s view on monetary policy; he is, however, expected to speak on policy and the economy later today. 
  • US mortgage rates last week fell at a steepest pace (on a weekly basis) since July 2022.
  • According to the Mortgage Bankers Association (MBA), the average 30-year fixed mortgage rate fell 25 bps, to 7.61%, the second consecutive weekly decrease.
  • The decline offers modest relief for the struggling housing market and incomes.
  • The slippage comes as the US economy shows signs of softening, while long-dated Treasury yields also slipped sharply.
  • China’s CPI fell 0.2% y/y in October, from 0% y/y in September.
  • The slippage was led by a 2.1% decline in the prices of food and drink.
  • The data implies domestic demand as still sluggish. 
  • PPI fell for a 13th consecutive month in October, by 2.6% y/y, from a 2.5% y/y decline in September.
  • Locally, manufacturing production for September is expected to have fallen by 2.5% y/y, from a 1.6% y/y increase in August; the data is due out today.
  • Mining production for September, also due out today, is likely to have declined by 2.4% y/y, from a 2.5% y/y decline in August.
  • Eskom: daytime loadshedding has been suspended; Stage 2 loadshedding will be implemented at 4pm today.
  • Brent crude oil is up this morning, and down by 7.2% year-to-date.
  • The gold price is down this morning, and up by 6.9% year-to-date.
  • Brent crude oil is currently at $79.69/bbl; ($79.54/bbl*).
  • Gold is at $1949/oz ($1953/oz*).
  • SA CDS 261bps*, Brazil 164bps* and Turkey 375bps*.
  • Yields: US 10yr at 4.49%*, German bund at 2.61%* and SA 10-year generic at 11.56%*, SA’s R2030 at 10.30%*.

* Denotes yesterday’s close. 

Key events and data: 

  • 11h00: Eurozone ECB publishes Economic Bulletin
  • 11h30: SA mining production (September)
  • 13h00: SA manufacturing production (September)
  • 15h30: US initial jobless claims (4 November)

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