The local data card will be headlined by mining production stats for September today. Recall that mining output expanded marginally in August, at +0.3% y/y. ‘PGM’ production was the primary driver of the overall reading in August. Unfortunately, outside of the improvement in PGMs, other key mining categories continued to weaken. South Africa’s industrial sectors have not yet benefitted from the GNU. Structural reform, enabled by improved policymaking, is needed to revive industry performance. In the mining sector specifically, railway & port inefficiencies and adverse legislation are key issues that must be addressed. The hope is thus that the GNU will implement these policies and allow more private-sector involvement in SOEs to help solve the country’s infrastructural issues. In the meantime, mining production data will likely continue reflecting disappointing outcomes until changes are enacted.
On the international front, the market’s focus is primarily shared between speculation on what a Trump White House will mean going forward, and the outlook for Fed policymaking. Regarding the former, it is worth noting that, as of yesterday, Republicans will officially maintain control of the House of Representatives, albeit by the thinnest of margins. The result confirms a ‘red sweep’, with Republicans holding all the levers of power in Washington. This will allow President-elect Trump to quickly fill out his Cabinet and other top administration roles and advance his agenda for at least the next two years.
Meanwhile, on the monetary policy front, there was nothing in yesterday’s US CPI print to discourage the Fed from cutting rates in December. The data showed stable inflation in October, with core goods disinflation stalled due to seasonal effects in used cars. Elevated inventories and high car loan rates may limit price gains, while broad goods disinflation continues otherwise. The focus now shifts to US PPI data today to add some colour to US inflationary dynamics, and an address by Fed Chairman Powell that will potentially hint at a slower rate-cut cycle.