In the loop 19 June 2025

In the loop

Christelle Grobler

What you should know this morning:

The rand is trading at R18.03/$ this morning, after closing unchanged yesterday (R17.98/$*).
EM currencies were mixed yesterday; the ARS (+1.8%), PEN (+0.9%) and COP (+0.8%) were the biggest gainers; the PHP (-0.5%), INR (-0.3%) and MYR (-0.2%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Central bank watch: the Bank of England (BOE), the Swiss National Bank (SNB) and the Norges Bank will decide on rates.
Of these, only the SNB is likely to announce a change in the policy rate today.
The SNB is expected to cut rates by 25bps, bringing the policy rate to zero.
The strong Swiss franc, given global uncertainties, introduces the risk that inflation may run below the bank’s 0.0% to 2.0% target range.
This risk of deflation might see the policy rate moving into negative territory in coming months – something last seen pre-pandemic.

The BOE is expected to keep interest rates at 4.25%.
Policymakers are trying to strike a balance between elevated inflation, higher oil prices, and a slowing economy.
The bank cut rates by 25bps in May.

The Fed held rates steady, as expected, last night.
The decision was unanimously supported by all voting members of the Fed.
The fed funds rate has been kept unchanged at a range of 4.25% to 4.50% since January.
Fed Chair Jerome Powell signalled no urgency to cut rates, repeatedly saying that the bank is “well positioned” to navigate the uncertain current environment.
New economic projections showed inflation as accelerating, with unemployment rising and growth turning more sluggish.
These updated forecasts are the first after most of the Trump administrations tariff announcements.
Officials raised their median estimate for inflation at the end of 2025, to 3.0%, from 2.7% at the March meeting.
Powell said the committee continued to expect tariffs to work their way into final prices, but that it would take time.
They marked down their forecast for economic growth this year to 1.4%, from 1.7%.
The forecast for the unemployment rate by the end of the year is now slightly higher, at 4.5%.
Officials are more split regarding the path ahead for rates for the rest of this year.
Most (10) still see two 25bps cuts this year, two see only one 25bps move, and seven (compared to four at the March meeting) now foresee rates remaining on hold.
Powell downplayed the divide among officials, saying that “No one holds these rate paths with a lot of conviction”.

Locally, wholesale trade sales for April are due out today.
Wholesale trade sales were under pressure in March, with sales volumes contracting 0.1% m/m.
In annual terms, sales volumes were 2.1% y/y lower in March.

Brent crude is unchanged this morning, but up by 2.8% year-to-date.
Crude exports from the Middle East have, at least for now, been largely unaffected by the escalating conflict.
However, prices to charter large oil tankers through the Strait of Hormuz have more than doubled since Israel struck Iran.
The gold price is up this morning, and up by 28.5% year-to-date.

Brent crude oil is currently at $76.70/bbl; ($76.70/bbl*).
Gold is at $3373/oz ($3369/oz*).
SA CDS 193bps*, Brazil 157bps* and Turkey 304bps*.
Yields: US 10yr at 4.39%*, German bund at 2.50%*, SA 10-year generic at 10.16%*, SA’s R2035 at 10.10%*.

* Denotes yesterday’s close.

Key events and data:

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