In the loop 18 February 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.45/$, after closing weaker yesterday (R18.41/$*).
EM currencies were mixed yesterday; the IDR (+0.3%), MXN (+0.2%) and TWD (+0.2%) were the biggest gainers; the CLP (-0.7%), PHP (-0.3%) and ARS (-0.3%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

Central bank watch: the Reserve Bank of Australia began its easing cycle today with a 25 bps interest rate cut, to 4.10%.
The central bank cited that inflation is approaching the top of its 2-3% target.
The bank also signalled a cautious approach to further easing.

The UK labour data for December is due out today; the unemployment rate is expected to have increased to 4.5% in December, from 4.4% in November.
Wage growth is expected to have increased 5.9% in the three months to December, from 5.6% in the previous three months.
However, a low response rate continues to distort the Labour Force Survey.
The German ZEW survey is scheduled for release today; the survey expectations gauge may increase ahead of the snap elections next week on 23 February.

The US Empire manufacturing survey for February is due out today; consumer sentiment likely increased in February.
The index is expected to have improved to -2.0 in February, from -12.6 in January.
The timing of the survey early in February coincided with President Trump’s announcement and postponement of tariffs on Canada and Mexico.
This is likely to weigh on some of the components to the index, particularly inventories and delivery times in the coming months.
The US NAHB housing market index for February is scheduled for release today; sentiment likely slipped in February, albeit only slightly.
The index is expected to come in at 46 in February, from 47 in January.
The builders’ sentiment index will likely have been pressured by the deterioration of the measure of prospective buyer traffic.
The current sales conditions also likely deteriorated in February.

Philadelphia President Patrick Harker yesterday commented that current monetary policy is well positioned, saying that policy “remains restrictive” after three interest rate cuts last year.
Harker expects interest rates to continue falling in the long run.
He added that economic growth and production remains resilient and that the labour market is in balance.
Harker remarked that “these are reasons enough for holding the policy rate steady”.
Policymakers are waiting for more progress on inflation before reducing rates further.
He nonetheless remains optimistic that inflation will continue a downward path.

Fed Governor Michelle Bowman commented that more progress on inflation is needed before the Fed cuts rates further.
Bowman sees inflation continuing to moderate this year.
However, she added that disinflation "may take longer than we would hope”.
She noted that the current level is appropriate for "allowing the Committee to be patient and pay closer attention to the inflation data as it evolves”.

Locally, Stats SA releases the Quarterly Labour Force Survey for Q4:24 today; the unemployment rate improved to 32.1% in Q3:24, from 33.5% in Q2:24.

Brent crude oil is currently at $75.41/bbl; ($75.22/bbl*).
Gold is at $2912/oz ($2898/oz*).
SA CDS 192bps*, Brazil 166bps* and Turkey 245bps*.
Yields: US 10yr at 4.50%*, German bund at 2.48%*, SA 10-year generic at 10.52%*, SA’s R2035 at 10.52%*.

* Denotes yesterday’s close.

Key events and data:

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