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In the loop 26 July 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is unchanged this morning, at R18.32/$, after closing weaker yesterday (R18.32/$*).
  • EM currencies were mixed yesterday; the RUB (+1.4%), PEN (+0.7%) and PLN (+0.3%) were the biggest gainers; the TRY (-0.7%), MXN (-0.3%) and CLP (-0.3%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.
 
  • The Bank of Russia will meet today to decide on interest rates and is largely expected to hike its key rate by 200 bps, to 18.0%.
  • This is likely to be the first policy rate change since December last year.
  • The bank’s forward guidance is expected to remain hawkish as the central bank tries to reverse the trend of rising inflation.
 
  • Eurozone inflation expectations for 1 year and 3 years ahead for June are scheduled for release later today.
  • One-year-ahead inflation expectations came in at 2.8% in May, from 2.9% in April.
  • Three-year-ahead inflation expectations registered at 2.3% in May, from at 2.4% in April.
  • Vice Governor of the Bank of Portugal Clara Raposa yesterday noted that the ECB would probably be able to lower interest rates twice more this year, provided that price pressures slow in line with expectations.
  • Raposa commented that receding inflation expectations should temper wage demand in the Eurozone.
 
  • US personal income and spending for June will be of interest today.
  • Personal income is expected to have increased by 0.4% m/m in June, after having increased by 0.5% m/m in May.
  • Personal spending is also expected to have improved in June, by 0.3% m/m, following a 0.2% m/m increase in May.
  • The Fed will keep an eye on the core PCE, which is expected to have increased by 0.2% m/m in June, after having increased by 0.1% m/m in May.
  • The Fed meets next week and is largely expected to keep the Fed funds rate unchanged.
  • Expectations, however, are growing that the Fed may signal that a September rate cut is on the horizon.  
  • The University of Michigan sentiment index (final estimate) for July is scheduled for release today; the sentiment index is likely to come in at 66.4 in July, from its previous estimate of 66.0, and 68.2 in June.
 
  • Locally, it’s a quiet day as far as data releases are concerned.
 
  • Oil prices were up yesterday after stronger US economic data helped to improve sentiment on demand for oil.
  • Brent crude is up this morning, and up by 7.1% year-to-date.
  • The gold price is up this morning, and up by 14.9% year-to-date.
 
  • Brent crude oil is currently at $82.52/bbl; ($82.37/bbl*).
  • Gold is at $2370/oz ($2362/oz*).
  • SA CDS 205bps*, Brazil 160bps* and Turkey 266bps*.
  • Yields: US 10yr at 4.24%*, German bund at 2.41%*, SA 10-year generic at 10.80%*, SA’s R2030 at 9.47%*.
 

* Denotes yesterday’s close.

Key events and data:

  • 10h00: Eurozone ECB 1yr and 3yr inflation expectations (June)
  • 14h30: US personal income and spending (June)
  • 16h00: US University of Michigan sentiment, 1yr and 5-10yr inflation expectations (July – final)
 

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