In the loop 03 June 2026

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R16.28/$, after closing stronger yesterday (R16.25/$*).
EM currencies were mixed yesterday; the BRL (+0.4%), MXN (+0.4%) and ZAR (+0.4%) were the biggest gainers; the RUB (-1.5%), COP (-0.6%) and KRW (-0.4%) 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: Iran has suspended indirect negotiations with the US, citing ongoing Israeli military operations in Lebanon, which Tehran argued undermined the broader ceasefire framework and made continued talks untenable.
President Trump has denied that talks have come to a halt.

BOE Governor Andrew Bailey yesterday told the House of Lords that policymakers face a tougher trade-off between weak growth and persistent inflation in the UK.
He indicated that the economic outlook remains subdued, with underlying growth constrained by structural factors and ongoing uncertainty.
He noted that, while inflation is expected to ease over time, it remains above the bank's 2% target, and subject to ongoing risks.
This combination creates a difficult policy environment in which efforts to bring inflation back to target must be balanced carefully against the risk of further weakening activity.
Bailey emphasised that monetary policy must be set with these trade-offs in mind.
He suggested that aggressive tightening to curb inflation could impose unnecessary damage on growth and employment, particularly given the fragile state of the economy.

The US has proposed new tariffs of at least 10% on imports from most major trading partners following an investigation into goods allegedly linked to forced labour.
A 10% tariff would apply to imports from countries and regions including Canada, Mexico, the European Union, Taiwan and the UK.
A higher 12.5% levy has been proposed for products from economies such as China, India, Japan, South Korea, Brazil and Switzerland.
The measures will not take effect immediately as they remain subject to a public consultation and review process before any implementation.
Written submissions are due by 6 July, while public hearings are scheduled to begin on 7 July.

Cleveland Fed President Beth Hammack yesterday signalled that the Fed might need to move relatively soon to tighten policy in response to persistent and increasingly concerning inflation pressures.
She acknowledged that it would be reasonable to keep interest rates on hold in the near term given uncertainty around the economic outlook.
However, she emphasised that inflation remains too high and appears to be broad-based and trending higher, raising doubts about whether current policy is sufficiently restrictive to return inflation to the Fed's 2% target.
Hammack indicated that she is more concerned about the risk of persistently elevated inflation than the risk to the labour market.
She warned that delaying action until there is clear evidence that inflation has become entrenched could necessitate more aggressive policy tightening later, with greater economic costs.

The US ISM services PMI for May is due out later today and is likely to have increased to 53.8, from 53.6 in April.
The ADP employment report for May, a precursor to the non-farm payrolls report due out on Friday, is likely to see private payrolls having increased by 120k in May, after having increased by 109k in April.
Factory orders are expected to have increased by 4.6% m/m in April, following a 1.5% m/m increase in March.
The Fed's Beige Book is also on the cards and is expected to continue characterising economic activity as mixed but generally positive.

Locally, the industry-wide PMI for May is due out today; the index is currently in expansion, at 51.6.

Brent crude oil is currently at $97.08/bbl; ($96.00/bbl*).
Gold is at $4468/oz ($4488/oz*).
SA CDS 128bps*, Brazil 119bps* and Turkey 237bps*.
Yields: US 10yr at 4.45%*, German bund at 2.97%*, SA 10-year generic at 8.62%*, SA's R2035 at 8.42%*.

* Denotes yesterday's close.

Key events and data:

09h15: SA S&P Global industry-wide PMI (May)
10h00: Eurozone S&P Global services and composite PMI (May – final)
10h30: UK S&P Global services and composite PMI (May – final)
11h00: Eurozone PPI (April)
13h00: US MBA mortgage applications (29 May)
14h15: US ADP employment change (May)
15h45: US S&P Global services and composite PMI (May – final)
16h00: US factory orders (April), ISM services PMI (May), durable goods orders (April – final)
20h00: US Fed Beige Book

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