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In the loop 25 October 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R17.67/$, after closing stronger yesterday (R17.67/$*).
  • EM currencies were mixed yesterday; the ZAR (+0.8%), CZK (+0.7%) and MXN (+0.5%) are the biggest gainers; the THB (-0.5%) and ARS (-1.0%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
 
  • Central bank watch: the Bank of Russia will meet today and is expected to hike its key rate by 100 bps, to 20.0%.
  • The central bank is expected to lift its inflation forecast for 2024 to 7.5-8.5%, from 6.5-7.0% in July.
 
  • The UK’s GfK consumer confidence slipped to -21 in October, from -20 in September.
  • Households are more pessimistic about the broader economic outlook despite improving sentiment about their personal finances.
  • Consumers are despondent ahead of the Budget and despite the decline in the headline rate of inflation.
 
  • Eurozone inflation expectations for 1 year and 3 years ahead for September are scheduled for release later today.
  • One-year-ahead inflation expectations are expected at 2.6% in September, from 2.7% in August.
  • Three-year-ahead inflation expectations are likely to have moderated to 2.2% in September, from at 2.3% in August.
 
  • ECB Chief Economist Philip Lane noted services inflation as likely to moderate in the coming months.
  • He noted that the fading out of idiosyncratic and temporary factors should translate into services inflation declining towards the underlying rate.
  • With inflation well below the bank’s 2% target and the economy slowing, a 50 bps rate reduction now seems more likely.
  • However, ECB Governing Council member Pierre Wunsch noted yesterday that it would be premature to start considering a 50 bps interest rate cut in December.
  • Wunsch noted that, while the Eurozone is exhibiting signs of weakening, policymakers must wait for further inflation data and assess how the economy develops before making conclusions.
  • ECB President Christine Lagarde noted earlier this week that the direction for rates is “clear”; the speed of rate cuts will be determined as new data comes in. 
 
  • The US University of Michigan sentiment (final estimate) index for October is also due out today.
  • The sentiment index is likely to have been revised upwards, to 69.1, from the previous estimate of 68.9, and 70.1 in September.
  • One-year ahead inflation expectations are likely to come in at 2.9% in October, from 2.7% in September.
  • The 5-10-year ahead inflation expectations are expected at 3.0% in October, from 3.1% in September.
 
  • Locally, it’s a quiet day.
 
  • Brent crude is up this morning, and down by 3.2% year-to-date.
  • The gold price is down this morning, and up by 32.2% year-to-date.
 
  • Brent crude oil is currently at $74.54/bbl; ($74.38/bbl*).
  • Gold is at $2728/oz ($2733/oz*).
  • SA CDS 187bps*, Brazil 159bps* and Turkey 273bps*.
  • Yields: US 10yr at 4.21%*, German bund at 2.26%*, SA 10-year generic at 10.56%*, SA’s R2035 at 10.62%*.
 

* Denotes yesterday’s close. 

Key events and data:

  • 10h00: Eurozone 1 yr and 3 yrs inflation expectations (September)
  • 14h30: US durable goods orders (September)
  • 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (October – final)
 

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