In the loop

What you should know this morning:

• The rand is stronger this morning, at R15.97/$, after closing stronger yesterday (R16.09/$*).
• EM currencies were mixed yesterday; the COP (+2.2%), CLP (+1.0%) and INR (+0.5%) were the biggest gainers; the RUB (-0.8%), KRW (-0.7%) and PLN (-0.6%) were the biggest losers.
• Asian equity markets are mixed; the Nikkei and Shanghai Composite are up; the Hang Seng is down.

• Central Bank Watch: the Reserve Bank of Australia (RBA) hiked rates this morning.
• The RBA increased its cash rate by 25 bps, to 3.85%, as widely expected; the decision was unanimous.
• Inflation is running above the RBA's 2-3% target band; core inflation is expected at 3.2% by the end of this year, up from 2.7% forecast at the November meeting.
• The RBA warned that core inflation could top 4.0% in 2026 due to the strength of demand.
• Labour force and consumer spending growth are outpacing forecasts, signalling building capacity pressures.
• This while low productivity keeps a lid on potential growth.
• The bank's statement noted that global uncertainties remain significant but has not caused a depressing effect on the country's economy.
• Governor Michele Bullock emphasised the RBA's cautious approach and was reluctant to provide forward guidance, noting that “the board doesn't have a particular path in mind” for rates.

• The US ISM manufacturing PMI came in stronger than expected in January.
• The index rose above the critical 50-point mark, signalling expansion, reaching 52.6 in January – up from 47.9 in December.
• This is the highest level since 2022; both new orders and production recorded the fastest growth in nearly four years.
• Orders surged, with a roughly 10-point increase in the new orders sub-index.
• Strong demand forced factories to ramp up production more than expected in January.
• Factories, however, reported that they are managing headcounts in the face of elevated input costs and concern over ongoing tariff issues.

• The partial US government shutdown has caused a delay in scheduled labour market data; both the January nonfarm payrolls data and the JOLTS job openings report for December have been delayed.
• A government shutdown affecting certain departments began on Saturday; Republicans have hoped to pass a Senate-backed bill extending funding by Monday night using an expedited procedure.
• But, there is push-back in the House against even the short extension (to 13 February) of funding for Homeland Security – which would see immigration raids continue.

• President Donald Trump and Prime Minister Narendra Modi have seemingly reached a trade deal.
• Trump said he would cut US tariffs on Indian goods to 18% from 25% and remove the extra punitive 25% duty applied in response to India's purchases of crude oil from Russia.
• India has sought for months to negotiate a lower tariff rate; India ships almost a fifth of its total exports to the US.
• Trump's tariffs of 50% amounted to the highest rate on products from any major trading partner.
• At 18%, India's tariff now compares well with Vietnam's 20% and the 19% for most of Southeast Asia.
• The reduction could also boost India's attractiveness as an alternative manufacturing location to China.

• Locally, there are no major data released scheduled for today.

• Brent crude is down this morning, and up by 8.5% year-to-date.
• The gold price is up this morning, and up by 11.8% year-to-date.

• Brent crude oil is currently at $65.98/bbl; ($66.30/bbl*).
• Gold is at $4832/oz ($4674/oz*).
• SA CDS 137bps*, Brazil 129bps* and Turkey 217bps*.
• Yields: US 10yr at 4.28%*, German bund at 2.87%*, SA 10-year generic at 8.17%*, SA's R2035 at 8.04%*.

* Denotes yesterday's close.

Key events and data:

• 17h00: US JOLTS job openings (December) – delayed due to the government shutdown

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