In the loop 20 March 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.11/$, after closing weaker yesterday (R18.16/$*).
EM currencies were mixed yesterday; the BRL (+0.4%), MYR (+0.2%) and INR (+0.1%) were the biggest gainers; the TRY (-3.1%), RUB (-2.8%) and COP (-1.1%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai composite are down.

Central bank watch: The US Fed’s FOMC kept the Fed funds rate unchanged yesterday as expected.
The Fed noted mounting concerns that the US economy is slowing, and inflation could remain stubbornly high.
Fed Chair Jerome Powell commented that the Fed is now at a point where it can cut or hold rates steady.
He added that there is a high degree of uncertainty from President Trump’s trade policy changes.
However, he noted that the Fed is not in a hurry to adjust policy.
Powell noted that Fed policymakers can wait for greater clarity on the impact of those policies on the economy before acting.
Powell commented that his base case is that any tariff-driven bump in inflation will likely be “transitory”.
Fed policymakers downwardly revised their forecasts for growth this year, while increasing the inflation outlook.
Policymakers continue to pencil in 50 bps of rate cuts this year.
US President Trump commented that the Fed would be “much better off cutting rates as US tariffs start to transition (ease) into the economy”.

The BOE is expected to keep its benchmark interest rate unchanged, at 4.5%, today.
Sweden's Riksbank is likely to keep policy on hold; the Swiss National Bank will likely cut rates by 25 bps, to 0.25%.

The UK labour data for the three months to January is on the cards today.
The unemployment rate is likely to have remained unchanged, at 4.4%, in January.
A low response rate to the Labour Force Survey, however, continues to distort the survey results.

US existing home sales for February are scheduled for release today.
Sales are likely to have declined by 3.2% m/m in February, after having decreased by 4.9% m/m in January.

Locally, we expect the SARB to cut the repo rate by 25 bps, to 7.25%, although this is a close call.
We’ll keep an eye on any changes to the SARB’s growth and inflation forecasts.

Eskom: Stage 2 loadshedding was implemented yesterday evening without any notice.
This came on the back of the loss of five generation units.
Eskom commented that it will continue to prioritise planned maintenance to strengthen system reliability ahead of the winter months.

Brent crude oil is currently at $71.19/bbl; ($70.56/bbl*).
Gold is at $3047/oz ($3030/oz*).
SA CDS 200bps*, Brazil 170bps* and Turkey 276bps*.
Yields: US 10yr at 4.24%*, German bund at 2.80%*, SA 10-year generic at 10.59%*, SA’s R2035 at 10.58%*.

* Denotes yesterday’s close.

Key events and data:

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