In the loop 27 March 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.20/$, after closing weaker yesterday (R18.26/$*).
EM currencies were mixed yesterday; the RUB (+0.4%), MYR (+0.2%) and IDR (+0.1%) were the biggest gainers; the PLN (-1.2%), HUF (-0.9%) and BRL (-0.6%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai composite are up.

China’s industrial profit growth fell by 0.3% in the first two months of 2025, compared to the same period last year.
This decrease is a worrying sign for the Chinese economy as tariffs loom.

ECB Governing Council member Francois Villeroy de Galhau yesterday reiterated that the central bank has room to cut rates “pragmatically”.
He added that the “euro system’s victory against inflation is almost assured”.
The bank has been able to significantly lower inflation and bring it close to the ECB’s 2% target.
Several ECB policymakers have, however, recently signalled that there is uncertainty around the April interest rate decision.
They have indicated uncertainty around global trade tensions as concerns.
Policymakers are expected to assess all incoming data in the lead-up to the April policy decision.
ECB Governing Council member Mario Centeno noted that there is currently no reason for the ECB to pause the rate-cutting cycle.

US President Trump has announced a 25% tariff on foreign car imports, to come into effect on 2 April.
President Trump’s reciprocal tariffs are expected to be implemented on 2 April too.
He noted that these rates would be lower than expected and “in many cases less than the tariff that they’ve been charging us for decades”.
President Trump also suggested that countries have limited room to negotiate repricing their goods.

St. Louis Fed President Alberto Musalem has indicated that it is not clear whether any inflationary impact from tariffs would prove temporary.
Musalem noted that secondary effects could prompt Fed policymakers to hold interest rates steady for longer.
He reiterated that it is important for inflation expectations to remain stable.
He added that he would be “especially vigilant about indirect, second-round effects on inflation”.
Musalem remarked that he supported the Fed’s decision to hold rates steady last week; he also supports a patient approach to monetary policy.

The US Q4:24 GDP (final estimate) is expected to come in at 2.3% q/q, unchanged from the previous estimate, and from 3.1% q/q in Q3:24.
Consumer spending increased in Q4:24 as inflation continued to cool; consumer spending increased by 4.2%.

Locally, the February PPI is on the cards today and is expected at 1.3% y/y, from 1.1% y/y in January.
On a m/m basis, PPI s expected to have increased by 0.7% in February, after having increased by 0.5% in January.
The SARB is scheduled to release the March Quarterly Bulletin today.

Brent crude oil is currently at $73.87/bbl; ($73.79/bbl*).
Gold is at $3034/oz ($3018/oz*).
SA CDS 213bps*, Brazil 182bps* and Turkey 306bps*.
Yields: US 10yr at 4.35%*, German bund at 2.79%*, SA 10-year generic at 10.64%*, SA’s R2035 at 10.63%*.

* Denotes yesterday’s close.

Key events and data:

10h00: SA SARB Quarterly Bulletin (March 2025)
11h00: Eurozone M3 money supply (February)
11h30: SA PPI (February)
14h30: US GDP (Q4:24), initial jobless claims (22 March), advance good trade balance (February)

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