In the loop 08 May 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R18.25/$, after closing weaker yesterday (R18.19/$*).
EM currencies were mixed yesterday; the ARS (+5.0%), RUB (+1.3%) and KRW (+0.6%) were the biggest gainers; the CLP (-0.7%), BRL (-0.5%) and RON (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

Central bank watch: the US FOMC kept the Fed funds rate unchanged yesterday, as expected.
Fed policymakers voted unanimously to keep the benchmark Fed funds rate in a range of 4.25% to 4.5%.
Fed Chair Jerome Powell noted policymakers as being in no hurry to adjust interest rates.
Policymakers felt that “it’s appropriate to be patient” at this stage given the risks to the economy.
The Fed chairman indicated that tariffs imposed by the Trump administration could lead to higher inflation and unemployment.
He nonetheless noted that “the effects on inflation could be short lived, reflecting a one-time shift in the price level”.
He remarked that it is “also possible that the inflationary effects could instead be more persistent”.

The Brazilian Central Bank (BCB) has hiked the Selic rate, by 50 bps, to 14.75%.
The central bank kept its options open for either an interest hike or a pause at its next policy meeting.
Policymakers indicated that they would remain vigilant as the “global environment is adverse and particularly unclear due to US economic and trade policies”.

The BOE interest rate decision is in focus today; the central bank is expected to cut its benchmark lending rate by 25 bps.
BOE governor Andrew Bailey is expected to focus on growth in the economy given the risks from US trade tariffs.
Bailey has warned that the global trade war will likely hit open economies such as the UK particularly hard.

The central banks of Norway and Sweden are expected to sit pat on rates today.

The UK’s Royal Institute of Chartered Surveyors (RICS) house price balance fell to -3% (the lowest since 2023) in April, from 2% in March.
This slippage came largely on the back of a property tax increase and the US trade war.
The gauge of agreed sales dropped to -31% in April.
The UK’s Decision Maker Panel 3m and 1yr inflation expectations for April are due out today.
One-year ahead inflation expectations are expected to have increased to 3.5% in April, from 3.4% in March.
The 3-month ahead inflation expectations are expected to have increased to 4.0% in April, from 3.9% in March.

Locally, the SARB’s gross and net reserves for April are scheduled for release today.
Net reserves are expected to have increased to $64.31bn in April, from $63.17bn in March.
Gross reserves were $67.45bn in March.
Manufacturing production for March is also scheduled for release today; production is expected to have increased by 0.8% y/y in March, after having fallen by 3.2% y/y in February.
On a m/m basis, manufacturing production is likely to have increased by 0.2% in March, following a 0.3% increase in February.

Brent crude oil is currently at $61.48/bbl; ($61.12/bbl*).
Gold is at $3374/oz ($3386/oz*).
SA CDS 230bps*, Brazil 180bps* and Turkey 340bps*.
Yields: US 10yr at 4.26%*, German bund at 2.47%*, SA 10-year generic at 10.66%*, SA’s R2035 at 10.61%*.

* Denotes yesterday’s close.

Key events and data:

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