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 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:

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