In the loop 03 December 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.16/$, after closing weaker yesterday (R18.17/$*).
EM currencies were largely down yesterday; the BRL (-1.6%), HUF (-1.3%) and RON (-0.8%) were the biggest losers; the PEN was up by 0.1%.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

The US ISM manufacturing index overshot expectations, coming in at 48.4 in November, from 46.5 in October.
This improvement came on the back of a surge in new orders.
Supply conditions also improved in November, while inventories decreased at a slower pace.
Today’s data indicates that manufacturing activity is not deteriorating as sharply as several months ago.
The final S&P Global manufacturing PMI increased to 49.7 in November, from a previous estimate of 48.8, and 48.5 in October.

Atlanta Fed President Raphael Bostic commented yesterday that he is still undecided about whether a rate cut is needed at the final FOMC meeting of the year.
Bostic nonetheless supports the case for the Fed to continue lowering rates over the coming months.
Bostic noted that the “risks to achieving the committee’s dual mandates of maximum employment and price stability have shifted such that they are roughly in balance”.
He expects the Fed to start shifting monetary policy towards a neutral stance.
He believes that inflation is on a sustainable path to achieving the bank’s 2% goal.

New York Fed President John Williams noted that Fed policymakers would likely need to lower rates further to move policy to a neutral stance.
Williams also noted that risks to both inflation and employment are now more balanced.
Williams commented that policy decisions will be made on a meeting-to-meeting basis and did not say whether he supported a December rate cut.
Fed Governor Christopher Waller noted that he would support a decision to trim rates at the upcoming FOMC meeting.
Waller nonetheless added that economic data due before then could make the case for holding rates steady.

The US Job Openings and Labour Turnover Survey (JOLTS) job openings for October are likely to have increased.
October JOLTS likely increased to 7.519 million, from 7.443 million in September.
Investors will also keep an eye on the non-farm payrolls (NFP) for November, due out on Friday.
NFP are expected to have increased, by 200k, following an increase of 12k in October.
The unemployment rate is likely to have remained unchanged, at 4.1%, in November.

Locally GDP growth for Q3:24 is in the spotlight today and is expected at 0.4% q/q (sa), from an increase of 0.4% q/q (sa) in Q2:24.
On a y/y basis, GDP growth is expected at 1.1% in Q3:24, from 0.3% in Q2:24.

Brent crude oil is currently at $71.95/bbl; ($71.83/bbl*).
Gold is at $2638/oz ($2638/oz*).
SA CDS 184bps*, Brazil 166bps* and Turkey 256bps*.
Yields: US 10yr at 4.18%*, German bund at 2.03%*, SA 10-year generic at 10.14%*, SA’s R2035 at 10.19%*.

* Denotes yesterday’s close.

Key events and data:

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