In the loop

What you should know this morning:

• The rand is stronger this morning, at R17.18/$, after closing stronger yesterday (R17.20/$*).
• EM currencies were mixed yesterday; the BRL (+0.5%), COP (+0.4%) and MXN (+0.3) were the biggest gainers; the RUB (-1.0%), PHP (-0.8%) and CZK (-0.5%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

• ECB President Christine Lagarde remarked yesterday that “sluggish export performance, driven by higher tariffs, a stronger euro, and increased global competition, is expected to weigh on growth for the rest of the year”. 
• She added, however, that these headwinds should ease in 2026.
• Lagarde described risks to economic growth as broadly balanced and noted that the range of risks surrounding the inflation outlook has narrowed. 
• Lagarde expects inflation to remain close to the ECB’s 2% target, with underlying price pressures on track and wage growth set to moderate further.
• She reiterated that upcoming policy decisions will remain data-dependent, stressing that the Governing Council would not pre-commit to any specific path for interest rates.
• Vice President Luis de Guindos and Chief Economist Philip Lane said yesterday that there is currently no need to cut rates. 
• Governing Council member Francois Villeroy de Galhau recently maintained that another rate reduction cannot be ruled out.

• BOE Governor Andrew Bailey yesterday emphasised the need for the UK to create an environment that supports and encourages investment. 
• He argued that economies require breakthroughs in so-called General Purpose Technologies (GPTs) to boost investment and productivity, citing artificial intelligence (AI) as a key example. 
• Bailey added that the BOE should adopt a “pragmatic and open-minded approach” towards both the opportunities and risks posed by AI. 
• He stressed that the central bank must do everything possible to ensure that the domestic investment environment remains supportive.

• Kansas City Fed President Jeff Schmid commented yesterday that policymakers must continue to push back against inflation, which remains persistently high. 
• He noted that “with inflation still too elevated, monetary policy should lean against demand growth to create room for supply to expand and ease price pressures”.
• He reiterated that interest rates are only “slightly restrictive”.
• While he supported the rate cut in September, Schmid suggested that the Fed may not need to lower rates again in the near term, given that inflation remains above target.
• Several Fed policymakers are due to speak on the economy and monetary policy today.

• The US August trade balance report, pending the government’s reopening, is expected to show a narrower deficit, reflecting the earlier decline in the advance goods trade gap.

• Locally, the SARB’s gross and net reserves for September are scheduled for release today.
• In August, gross reserves stood at $70.42bn, while net reserves were at $65.90bn in August.

• Brent crude is up this morning, and down by 12.2% year-to-date.
• The gold price is up this morning, and up by 51.0% year-to-date.

• Brent crude oil is currently at $65.57/bbl; ($65.47/bbl*).
• Gold is at $3963/oz ($3960/oz*).
• SA CDS 165bps*, Brazil 134bps* and Turkey 259bps*.
• Yields: US 10yr at 4.14%*, German bund at 2.71%*, SA 10-year generic at 9.32%*, SA’s R2035 at 9.20%*.

* Denotes yesterday’s close.

Key events and data: 

• 08h00: SA gross and net reserves (September)
• 14h30: US trade balance (August) - may be delayed due to the US government shutdown
• 21h00: US consumer credit (August) - released by the Fed, may be delayed if systems are paused due to the US government shutdown 

Read PDF