In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R17.62/$, after closing weaker yesterday (R17.66/$*).
- EM currencies were mixed yesterday; the TRY (+0.1%), HUF (+0.1%) and ARS (+0.1%) were the biggest gainers; the MXN (-1.6%), CLP (-1.5%) and RUB (-1.4%) 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 Thailand will meet today and is expected to hold its benchmark interest rate unchanged, at 2.50%.
- The central bank considers the current policy rate to be at a neutral level.
- The Monetary Authority of Singapore is also expected to keep policy unchanged today.
- Bank Indonesia is largely expected to keep its policy rate at 6.00%.
- UK CPI is likely scheduled for release today and is expected to come in at 1.9% y/y in September, from 2.2% y/y in August.
- Fuel prices are likely to have pushed headline inflation down in September.
- Core CPI is expected at 3.4% y/y in September, from 3.6% y/y in August.
- Services inflation is expected to have moderated in September.
- The data will likely support the case for the BOE to trim rates further when meeting on 7 November.
- San Francisco Fed President Mary Daly commented yesterday that the Fed must remain vigilant as inflation declines and the labour market cools.
- Daly is confident that Fed policymakers could keep the current economic expansion on track.
- She added that the US labour market was close to pre-pandemic levels and was “no longer a source of major inflationary pressures”.
- Daly believes that the Fed’s inflation and employment goals are now balanced.
- Daly noted that the 50 bps rate cut in September was a “recalibration” of policy as inflation moderates.
- Locally, the SARB’s Monetary Policy Review highlighted that “policy is still moderately restrictive”.
- Governor Lesetja Kganyago noted that “while disinflation is on track, uncertainty remains”.
- The SARB sees future policy moves to be guided by incoming economic data.
- The bank also noted that recent rand appreciation has supported the disinflation process, which had previously “been driven by a moderately restrictive monetary policy stance”.
- The MPR signalled the SARB as confident on the outlook for inflation and economic growth.
- The review also signalled a further 25 bps rate cut as on the cards this year (at the November MPC meeting).
- Retail sales for August are due out today and are expected to have increased by 2.3% y/y, following 2.0% y/y in July.
- Retail sales were down by 0.2% m/m in July.
- Brent crude is up this morning, and down by 3.4% year-to-date.
- The gold price is up this morning, and up by 29.3% year-to-date.
- Brent crude oil is currently at $74.47/bbl; ($74.25/bbl*).
- Gold is at $2666/oz ($2661/oz*).
- SA CDS 179bps*, Brazil 152bps* and Turkey 265bps*.
- Yields: US 10yr at 4.03%*, German bund at 2.22%*, SA 10-year generic at 10.40%*, SA’s R2035 at 10.47%*.
* Denotes yesterday’s close.
Key events and data:
- 08h00: UK CPI, PPI, RPI (September)
- 13h00: SA retail sales (August)
- 13h00: US MBA mortgage applications (11 October)
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