In the loop 18 September 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.59/$, after closing weaker yesterday (R17.64/$*).
EM currencies were mixed yesterday; the MYR (+1.0%), PEN (+0.7%) and COP (+0.5%) were the biggest gainers; the CLP (-1.0%), TRY (-0.3%) and RUB (-0.2%) 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 US FOMC meeting is in the spotlight today, with investors watching whether the Fed will cut the Fed funds rate by 25 bps or 50 bps today.
Consensus expectations are for the Fed to begin the rate-cutting cycle with a 25 bps cut.
Several policymakers recently indicated that the size of an interest rate cut would depend on all incoming economic data ahead of this policy meeting.
The latest CPI data for August moderated to 2.5% y/y, from 2.9% y/y in July, while core CPI remained unchanged, at 3.2% y/y, in August.
The data supports the commencement of the rate-cutting cycle at today’s FOMC meeting.
Bank Indonesia too will be meeting today and is largely expected to keep its benchmark interest rate unchanged, at 6.0%.
The Brazilian central bank is expected to hike the Selic rate by 25 bps, to 10.75%.

US housing starts and building permits for August are due out today.
Construction activity was disrupted by major weather events in July; activity in August is likely to have recovered partially.
The August data is expected to show an increase in both housing starts and building permits.
Housing starts are likely to have increased by 6.2% m/m (to 1315k) in August, after having declined by 6.8% m/m (1238k) in July.
Building permits, a proxy for future construction, are also expected to have improved, by 1.0% m/m in August, from a 3.3% m/m decrease in July.

UK CPI for August is likely to come in at 2.2% y/y, unchanged from July.
On a m/m basis, CPI is likely to have increased by 0.2% m/m in August, after having declined by 0.3% m/m in July.
Core CPI is also likely to have increased in August.

Locally, CPI for August is expected at 4.5% y/y, from 4.6% y/y in July.
On a m/m basis, CPI is expected to have increased by 0.2% in August, after having increased by 0.4% in July.
Core CPI is likely to come in at 4.2% y/y in August, from 4.3% y/y in July.
Retail sales for July, also due out today, are expected to have increased by 2.8% y/y, following a 4.1% y/y increase in June.

Brent crude oil is currently at $73.34/bbl; ($73.70/bbl*).
Gold is at $2566/oz ($2563/oz*).
SA CDS 179bps*, Brazil 148bps* and Turkey 260bps*.
Yields: US 10yr at 3.64%*, German bund at 2.14%*, SA 10-year generic at 10.11%*, SA’s R2030 at 8.84%*.

* Denotes yesterday’s close.

Key events and data:

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