In the loop 25 June 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.73/$, after closing stronger yesterday (R17.74/$*).
EM currencies were largely down yesterday; the KRW (+1.7%), HUF (+1.4%) and CLP (+1.4%) were the biggest gainers; the BRL was down by 0.3%.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

Central bank watch: the Bank of Thailand is expected to keep its benchmark interest rate unchanged at 1.75% today.

BOE Governor Andrew Bailey appeared before the Lords Economic Affairs Committee yesterday.
Bailey remarked that current global economic events are too unpredictable to judge the effects on the UK economy.
However, he noted that domestic factors are more important to the UK than global factors.
He added that the underlying growth in the economy is not as strong as implied by the official Q1 GDP reading.
Bailey further pointed out that he sees the interest rate path as downward.

ECB Chief Economist Philip Lane yesterday noted that the disinflation process of bringing inflation down to the bank’s 2% target is “largely completed”.
Lane noted though that there are still some remaining pockets of elevated price pressures.
He highlighted that the outlook for the Eurozone economy may also still be subjected to substantial risks from US tariffs as well as tensions in Ukraine and the Middle East.
Lane added that the central bank must ensure that the medium-term target is protected from these factors, including uncertainty about trade.

US Fed Chair Jerome Powell yesterday delivered his semi-annual testimony to the House Financial Services Committee.
Powell faced questions about monetary policy and the prospects for future interest rate cuts.
Powell commented that the reason for the Fed keeping rates unchanged is that the bank’s forecasts as well as external forecasts imply that inflation is likely to increase meaningfully this year.
In addition, inflation expectations have increased primarily because of tariffs.
Powell added that the majority of Fed policymakers believe that it would be appropriate to only cut the Fed funds rate later this year.
He noted that the path of the economy is highly uncertain.
Powell will face the Senate Banking Committee today.

Cleveland Fed President Beth Hammack commented that monetary policy may remain on hold for some time.
Hammack noted that interest rates are currently only modestly restrictive.
The Fed still has “some distance to go” before reaching its 2% inflation target.
She highlighted that the official readings may not accurately capture current economic developments, which includes recent moves in the oil price.
Fed policymakers have different views on the timing of when the Fed should cut rates, with some expecting rate cuts as early as July.

US new homes sales for May are scheduled for release today; a 6.7% m/m decline is expected in May, following a 10.9% m/m increase in April.
Rising mortgage rates likely created headwinds as buyers continue to battle with affordability.

Brent crude oil is currently at $67.94/bbl; ($67.14/bbl*).
Gold is at $3330/oz ($3318/oz*).
SA CDS 187bps*, Brazil 152bps* and Turkey 295bps*.
Yields: US 10yr at 4.29%*, German bund at 2.54%*, SA 10-year generic at 10.06%*, SA’s R2035 at 9.94%*.

* Denotes yesterday’s close.

Key events and data:

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