In the loop 05 February 2025

In the loop

Christelle Grobler

What you should know this morning:

The rand is trading at R18.69/$ this morning, after closing stronger yesterday (R18.68/$*).
EM currencies were mixed yesterday; the CLP (+1.7%), PLN (+1.5%) and HUF (+1.3%) gained the most; the MXN (-0.3%), PEN (-0.2%) and TWD (-0.1%) lost the most.
Asian equity markets are mixed; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

China’s Caixin services PMI surprised on the downside in January, but remained in expansion.
The services PMI dipped to 51.0 in January, from 52.2 in December.
Caixin reported that services firms saw the pace of growth in demand slow in January; however, spending growth likely picked up into month end and early February around the Lunar New Year.
Firms also noted intense market competition and global trade uncertainties in their responses, according to Caixin.
The Caixin composite PMI slipped from 51.4 in December, to 51.1 in January.

US factory orders was lower than expected in December, with November’s orders also revised down.
Factory orders declined 0.9% m/m in December, from a downwardly revised 0.8% m/m decline in November (previously -0.4% m/m).
Excluding transportation, factory orders were up 0.3% m/m in December and 0.2% m/m in November.
The JOLTS job openings for December fell to the lowest level since September.
Job openings came in at 7,600k in December, down from 8,156k in November.
Non-farm payrolls data for January, due out on Friday, will be closely watched as a gauge of labour market conditions.

Fed Vice Chair Philip Jefferson said that US policymakers should tread carefully on the path of reducing monetary policy restrictiveness.
“I continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome”, said Jefferson.
The Fed left its funds rate unchanged between 4.25% and 4.50% at its meeting last week, after three consecutive interest rate cuts since September 2024.
“I do not think we need to be in a hurry to change our stance”, he added.

Locally, the S&P Global SA PMI for January will be released this morning.
Business conditions deteriorated in December, with the PMI dropping below the neutral 50-mark, to 49.9.
Conditions likely remained challenging in January.
The SA manufacturing PMI for January, released earlier this week, declined deeper into contraction, to 45.3.

Fuel price increases for February are effective from today.
The retail price of both grades of petrol rose 82c/l overnight.
The wholesale price of diesel is 101c/l and 105c/l higher, depending on the sulphur content.

Brent crude oil is currently at $75.80/bbl; ($76.20/bbl*).
Gold is at $2856/oz ($2844/oz*).
SA CDS 200bps*, Brazil 174bps* and Turkey 254bps*.
Yields: US 10yr at 4.51%*, German bund at 2.40%*, SA 10-year generic at 10.41%*, SA’s R2035 at 10.43%*.

* Denotes yesterday’s close.

Key events and data:

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