In the loop 21 May 2026

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R16.50/$, after closing stronger yesterday (R16.45/$*).
EM currencies were mixed yesterday; the COP (+1.6%), ZAR (+1.4%) and CLP (+1.0%) were the biggest gainers; the INR (-0.3%), THB (-0.1%) and RUB (-0.1%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

Iran war: indirect negotiations have continued, with Washington signalling talks as in “final stages”.
It also warned that military action could resume if Iran failed to agree to acceptable terms.
Iran issued strong warnings that any renewed attacks would trigger a broader regional war, potentially extending beyond the Middle East and opening new fronts.

Central bank watch: the minutes of the 28-29 April US FOMC meeting noted that most Fed policymakers warned that the Fed might need to consider raising interest rates if inflation remains persistently above the 2% target.
Several policymakers argued that the Fed should remove its easing bias and signal that its next policy move could be a rate increase.
The majority also noted a growing risk that inflation would take longer than previously expected to return to the bank's 2% objective.
The FOMC discussion marked a significant shift from the start of the year when the Fed was still signalling that interest rate cuts were the most likely policy path for 2026.

ECB Governing Council member Pierre Wunsch yesterday signalled a hawkish shift in the policy outlook.
He warned that a June rate hike is “quite likely” if the ongoing war does not end, as the conflict is already contributing to rising inflation pressures.
He characterised the Eurozone as being at the “beginning of an inflation problem,” with higher energy prices from the conflict posing risks of broader and more persistent price increases.
Wunsch emphasised that, while the ECB values waiting for more clarity, policymakers will ultimately need to act to prevent these pressures from becoming entrenched, particularly if the Iran conflict persists into June.
He also indicated that market expectations for multiple interest rate hikes this year are broadly reasonable.

In the Eurozone, the May composite PMI is due out today; the composite PMI is likely to have remained unchanged, at 48.8, in May.
The services PMI is likely to have increased slightly in May but remaining in negative territory.
The manufacturing PMI is expected to have deteriorated in April, albeit likely remaining above 50.
The UK composite PMI for May, scheduled for today, is expected to have slipped to 51.6, from 52.6 in May, reflecting concerns over the economic impact of the Iran war.
The manufacturing PMI is expected to have slipped to 53.0 in May, from 53.7 in April.
The services PMI is also expected to have slipped, to 51.7 in May, from 52.7 in April.

The US PMI data for May are also on the cards today; the composite PMI is expected to have increased to 51.8 in May, from 51.7 in April.
The manufacturing PMI is expected to have slipped, while the services PMI is expected to have improved.

Brent crude oil is currently at $105.61/bbl; ($105.02/bbl*).
Gold is at $4525/oz ($4544/oz*).
SA CDS 149bps*, Brazil 125bps* and Turkey 245bps*.
Yields: US 10yr at 4.58%*, German bund at 3.09%*, SA 10-year generic at 8.90%*, SA's R2035 at 8.73%*.

* Denotes yesterday's close.

Key events and data:

10h00: Eurozone current account (March), S&P Global manufacturing, services and composite PMI (May)
10h30: UK S&P Global manufacturing, services and composite PMI (May)
14h30: US initial jobless claims (16 May), housing starts (April), building permits (April)
15h45: US S&P Global manufacturing, services and composite PMI (May)
16h00: Eurozone consumer confidence (May)

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