In the loop 18 August 2022

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R16.65/$, after closing weaker yesterday (R16.66/$*).
EM currencies were mixed yesterday; the RUB (+1.4%), INR (+0.3%) and CNY (+0.1%) were the biggest gainers; the COP (-2.3%), CLP (-1.9%) and ZAR (-1.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

The US FOMC meeting minutes for July noted policymakers as expecting smaller rate increases ahead while evaluating the effects of “cumulative policy adjustments on economic activity and inflation”.
Officials noted a risk that the committee could tighten policy by more than necessary to restore price stability.
The FOMC indicated a significant risk around “elevated inflation becoming entrenched if the public began to question the committee’s resolve to adjust the stance of policy sufficiently”.
All policymakers supported raising rates by 75 basis points at the July meeting.

The Turkish Central Bank will meet today and is once again expected to keep rates unchanged, at 14%.
Policymakers are expected to ignore the threat of rising prices, rather bowing to political pressure.
CPI increased to 79.6% y/y in July, from 78.6% y/y in June; this takes the real policy rate close to -66%, the lowest amongst peers.
The central bank expects CPI to end the year around 60%.
The TRY has also lost ground against the dollar and is weaker by almost 26% so far this year.
The TRY has weakened despite intervention by the central bank to the tune of USD70bn.

The Eurozone’s final CPI print for July is scheduled for release today and is expected at 8.9% y/y, from 8.6% y/y in June.
Core CPI is expected to have increased to 4.0% y/y in July, from 3.7% y/y in June.
Services inflation is expected to have increased.
Energy prices are expected to have eased somewhat, while food and non-energy industrial goods prices likely increased.

Locally, it’s a quiet day as far as data releases are concerned.
Eskom will continue with Stage 2 load shedding today from 4pm until midnight.

Brent crude oil is down marginally this morning, and up by 20.5% year-to-date.
The gold price is up this morning, and down by 3.5% year-to-date.

Brent crude oil is currently at $93.75/bbl; ($93.65/bbl*).
Gold is at $1764/oz ($1762/oz*).
SA CDS 271bps*, Brazil 259bps* and Turkey 736bps*.
Yields: US 10yr at 2.89%*, German bund at 1.08%* and SA 10-year generic at 10.63%*, SA’s R186 at 8.73%*.

* Denotes yesterday’s close.

Key events and data:

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