In the loop 07 May 2026

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R16.38/$, after closing stronger yesterday (R16.41/$*).
EM currencies were mixed yesterday; the KRW (+1.8%), CLP (+1.7%) and THB (+1.5%) were the biggest gainers; the BRL (-0.3%), RON (-0.2%) and COP (-0.2%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

Iran war: President Trump yesterday announced a temporary pause to “Project Freedom,” the US naval mission aimed at escorting commercial shipping through the Strait of Hormuz.
The US cited “great progress” in Pakistan-mediated talks with Tehran towards a one-page memorandum to end the conflict and reopen the strait.

Central bank watch: Sweden's Riksbank is expected to keep its policy rate on hold today.
The central bank may signal a pause as it weighs up softer growth against upside inflation risks.
Bank Negara Malaysia is also largely expected to leave its overnight policy rate unchanged, at 2.75%.

St. Louis Fed President Alberto Musalem commented that inflation remains meaningfully above the Fed's 2% target.
He noted that current inflation is running closer to 3%, reflecting persistent price pressures that have yet to return to levels consistent with price stability.
He acknowledged some signs of cooling in parts of the economy.
Musalem, however, cautioned that elevated inflation, partly linked to tariffs and other supply-side factors, poses a risk of becoming more persistent than expected.
He emphasised that the Fed must remain focused on ensuring that inflation continues to move sustainably back towards target, even as policymakers balance potential downside risks to growth and the labour market.
His comments underscored the need for continued vigilance in monetary policy.

Chicago Fed President Austan Goolsbee yesterday cautioned against automatically cutting interest rates in response to stronger productivity growth.
He noted that the appropriate policy response depends on whether the gains are unexpected or anticipated.
Goolsbee explained that a surprise improvement in productivity can help contain inflation, potentially allowing for lower rates.
However, if productivity gains are expected in advance, the resulting increase in investment and spending could fuel inflationary pressures, warranting tighter policy.
Goolsbee also warned that the Fed should remain vigilant about economic activity driven by overly optimistic assumptions about future growth.
He added that interest rates may need to stay higher to prevent overheating if enthusiasm around productivity gains becomes excessive.

Locally, the electricity production and consumption for March are due for release later.
SARB Governor Lesetja Kganyago commented yesterday that the central bank must retain full flexibility on interest rates amid a highly uncertain global environment.
Kganyago highlighted that geopolitical shocks, particularly the Middle East conflict driving higher oil prices, pose a significant upside risk to inflation.
He noted that inflation has begun to edge higher and that it could rise above 4% in the coming months.

Oil prices fell sharply yesterday after the US paused an operation assisting commercial vessels through the Strait of Hormuz.
This followed assurances from the Iranian Navy that safe passage through the key shipping route would be maintained.
Brent crude is up this morning, and up by 67.4% year-to-date.
The gold price is up this morning, and up by 8.9% year-to-date.

Brent crude oil is currently at $101.88/bbl; ($101.27/bbl*).
Gold is at $4704/oz ($4691/oz*).
SA CDS 146bps**, Brazil 116bps* and Turkey 230bps*.
Yields: US 10yr at 4.35%*, German bund at 2.99%*, SA 10-year generic at 8.75%*, SA's R2035 at 8.59%*.

* Denotes yesterday's close.

Key events and data:

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