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In the loop 28 March 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R18.92/$, after closing stronger yesterday (R18.89/$*).
  • EM currencies were mixed yesterday; the MXN (+0.7%), ZAR (+0.4%) and PHP (+0.2%) were the biggest gainers; the KRW (-0.7%), IDR (-0.4%) and THB (-0.3%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
  • US Fed Governor Christopher Waller commented that there is no need to rush to ease interest rates.
  • He highlighted that recent economic data warrants delaying, or reducing, the number of cuts this year. 
  • Waller noted that the recent inflation data was “disappointing” and that he would want to see “at least a couple months of better inflation data” before cutting rates. 
  • He suggested that the Fed has room to wait to gain confidence that inflation is on a sustained path to the 2% target. 
  • He cited the economy as relatively strong and hiring as quite robust as reasons that the bank can wait before cutting interest rates.
  • Former Fed Vice Chair Richard Clarida commented yesterday that policymakers “need to be on guard against sticky prices that could thwart plans to ease monetary policy this year”.
  • He added that “if the Fed were targeting CPI right now”, the Fed would not be discussing interest rate cuts.
  • The Fed is largely expected to cut rates by June this year.
  • The US Q4:23 GDP (third estimate) is scheduled for release today and will likely remain unchanged, at 3.2% q/q (annualised). 
  • There is a risk that growth could be revised lower due to a wider trade deficit and a greater reduction in inventories. 
  • Consumer spending is expected to have continued supporting growth in Q4:23.
  • However, expectations are for spending to slow in the coming months.
  • The March (final estimate) of the University of Michigan survey is expected to remain unchanged.
  • The University of Michigan sentiment index declined to 76.5 in March, from 76.9 in February.
  • The 1-yr inflation expectations remained unchanged, at 3.0% in March; 5-10-yr inflation expectations also remained unchanged, at 2.9%, in March.
  • Locally, the M3 and private sector credit extension (PSCE) for February are due out today.
  • PSCE is likely to come in at 3.24% y/y in February, from 3.16% y/y in January.
  • The February trade balance is scheduled for release today; a trade surplus of R9bn is expected, from a deficit of R9.4bn in January.
  • The monthly Budget balance data for February is also on the cards today; the deficit is likely to have narrowed to R7.5bn in February, from R54.7bn in January. 
  • The February PPI is expected to have increased to 5.0% y/y, from 4.7% y/y in January.
  • The SARB will publish its March Quarterly Bulletin today.
  • Eskom: loadshedding has been suspended until after the long weekend.
  • Brent crude is up this morning, and up by 12.1% year-to-date.
  • The gold price is up this morning, and up by 6.4% year-to-date.
  • Brent crude oil is currently at $86.39/bbl; ($86.09/bbl*).
  • Gold is at $2195/oz ($2190/oz*).
  • SA CDS 258bps*, Brazil 134bps* and Turkey 319bps*.
  • Yields: US 10yr at 4.19%*, German bund at 2.29%* and SA 10-year generic at 11.96%*, SA’s R2030 at 10.54%*.

* Denotes yesterday’s close.

Key events and data:

  • 08h00: SA M3 money supply and PSCE (February)
  • 09h00: UK GDP current account balance (Q4:23 – final)
  • 10h00: SA SARB Quarterly Bulletin (March)
  • 11h00: Eurozone M3 money supply (February)
  • 11h30: SA PPI (February)
  • 14h00: SA trade balance (February), monthly budget balance (February)
  • 14h30: US GDP (Q4:23 – final), initial jobless claims (23 March)
  • 16h00: US University of Michigan sentiment index, 1 yr and 5-10 yr inflation expectations (March – final)

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