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Closing the loop 01 August 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger at R16.46/$ (R16.62/$*) today; it ranged between R16.43/$ and R16.66/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R16.24/$, R15.76/$ and R15.62/$).
  • EM currencies are mixed today; the THB (+2.2%), HUF (+2.2%) and RUB (1.3%) are the biggest gainers; the ARS (-0.5%), KRW (-0.4%) and CNY (-0.4%) are the biggest losers.
  • The UK’s final manufacturing PMI estimate for July fell to a 25-month low to 52.1 pts from 52.8 pts in June.
  • The slippage comes as the intake of new workers and new export business both continued to decline in July.
  • The data also reflected weaker market demand, difficulties in sourcing components and transportation delays.
  • The composite index also slumped in May to 53.1 pts from 58.2 pts in April.
  • The data is unlikely to have an impact on the BOE’s thinking on monetary policy this week; the bank is expected to hike rates by 50 bps to 1.75%.
  • Policymakers have to weigh inflationary pressures against the rising risks of recession.
  • The Eurozone manufacturing PMI fell into contractionary territory in July for the first time since June 2020.
  • The index fell to 49.8 pts in July from 52.1 pts in June.
  • The Eurozone unemployment rate remained steady at a historic low of 6.6% in June.
  • Locally, the BER manufacturing PMI overshot expectations slipping to 47.6 pts in July from 52.2 pts in June.
  • Manufacturing sentiment is now below the 50-benchmark line for the first time since July last year.
  • The slippage comes on the back of the power crisis in July; the employment index entered contractionary territory once again in July.
  • The new sales orders and the expected business conditions in 6 months’ time dropped further during the month.
  • The business activity index was below the 50-benchmark line for the fourth consecutive month.
  • Vehicle sales overshot expectations in July coming in at 30.9% y/y after having increased by 7.6% y/y in June.
  • 43,593 vehicles were sold in July; this compares with 33,312 sold in July 2021 and 41,052 vehicles sold in June 2022.
  • 31,455 passenger cars were sold in July, compared to 20,938 passenger cars sold in July 2021; 9,547 light commercial vehicles were sold, down from 10,257 in July 2021.
  • Vehicle exports were up by 177.7% y/y to 31,242 units in July, compared with 11,252 units in July 2021.
  • Naamsa noted that the vehicle market performance in July was distorted by the riots in July 2021 as well as the cyberattack on Transnet operations in July last year.
  • The oil price is down by 9.4% today, and up by 28.0% in the year-to-date.   
  • The gold price is up by 0.1% today, and down by 3.4% in the year-to-date.
  • Brent crude oil is at $99.56/bbl ($110.01/bbl*).
  • Gold price is at $1767/oz ($1765/oz*). 
  • SA CDS is at 286bps (301bps*), Brazil 273bps (274bps*), Turkey 778bps (822bps*).
  • Yields: US 10yr at 2.61% (2.64%*), German bund at 0.79% (0.82%*) and SA 10-year generic at 10.93% (10.80%*), SA’s R186 is at 9.07% (8.91%*).
  • The JSE ALSI is down by 0.6% today (+0.5%*).

* Denotes Friday’s close. 

Key events and data:

  • 08h00: UK nationwide house prices (July)
  • 16:00: US JOLTS job openings (June)

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