In the loop 03 September 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is unchanged this morning, at R17.86/$, after closing weaker yesterday (R17.86/$*).
EM currencies were mixed yesterday; the RUB (+0.9%), TRY (+0.5%) and PLN (+0.5%) were the biggest gainers; the THB (-1.1%), MYR (-0.9%) and CLP (-0.8%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Turkey’s CPI is likely to come in at 51.9% y/y in August, from 61.8% y/y in July, due to strong favourable base effects.
On a m/m basis, CPI is likely to have increased by 2.3% in August, after having increased by 3.2% in July.
Annual CPI is expected to continue moderating in the coming months, albeit at a slower pace.
It is likely to dip below 50% in September and end the year close to 43%.
Despite this expected improvement, inflation is likely to remain above the central bank’s 5% target until mid-2027.

Growth in UK retail sales and consumer spending picked up in August.
According to the British Retail Consortium (BRC), retail sales rose 0.8% m/m in August, after increasing by 0.3% m/m in July.
Warm weather boosted purchases of summer clothing and food.

BOE Deputy Governor Sarah Breeden commented that interest rates would likely remain at their 15-year highs for some time as the BOE tries to bring inflation sustainably back to the BOE’s 2% inflation target.
Breeden noted that while inflation is moving in the right direction, the central bank’s job isn’t done yet.
She noted that she would “approach each vote humbly and pragmatically, with no pre-determined policy path in mind”.

The US S&P Global manufacturing PMI for August (final estimate) likely remained unchanged at 48.0, from the previous estimate, and from 49.6 in July.
The ISM manufacturing index for August is also due out today; the index likely increased to 47.5 in August, from 46.8 in July.

Locally, SA GDP for Q2:24 is in the spotlight today and is expected at 0.5% q/q (sa), from a contraction of 0.1% q/q (sa) in Q1:24.
On a y/y basis, GDP growth is expected at 0.3% in Q2:24, from 0.5% in Q1:24.
The latest economic activity data releases corroborate our long-standing expectation for an economic recovery in Q2:24.
The swing from severe loadshedding in Q1:24 to the absence thereof throughout Q2:24 was a major support factor for this expected switch from a real GDP contraction in Q1:24 to a forecast expansion in Q2:24.
We expect a further improvement in economic activity in H2:24, supported by improved confidence following the formation of the GNU and appointment of a new cabinet towards the end of Q2:24
The likely durable absence of loadshedding and the likely further easing of logistical bottlenecks should support economic growth in H2:24.

Brent crude oil is currently at $77.24/bbl; ($77.52/bbl*).
Gold is at $2496/oz ($2500/oz*).
SA CDS 182bps*, Brazil 152bps* and Turkey 274bps*.
Yields: US 10yr at 3.90%*, German bund at 2.33%*, SA 10-year generic at 10.51%*, SA’s R2030 at 9.21%*.

* Denotes yesterday’s close.

Key events and data:

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