In the loop 23 May 2022

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R15.81/$, after closing stronger on Friday (R15.84/$*).
EM currencies were mixed on Friday; the RUB (+2.1%), BRL (+1.0%) and THB (+0.9%) were the biggest gainers; the BGN (-0.3%), RON (-0.3%) and TRY (-0.2%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

ECB President Christine Lagarde has once again signalled the first rate increase as “likely to be soon”.
She added that a hike may come "weeks" after net bond-buying has ended early next quarter.
However, she downplayed the notion of a 50 bps increase amid concerns about regional economic growth.

The US PCE deflator, the Fed's preferred measure of inflation, likely slowed to 6.2% y/y in April, from 6.6% y/y in March.
The core measure likely eased, too, to 4.9% y/y in April, from 5.2% y/y in March.
Personal income and spending figures will likely show that US consumers remain resilient despite elevated price pressures.
US new and pending home sales, due Tuesday and Thursday, likely fell in April.
The US FOMC April meeting minutes are due this week.

The World Economic Forum (WEF) takes place in Davos this week.
Christine Lagarde will speak mid-week; there may be multiple appearances from ECB officials and BOE officials.

Indonesia is expected to hold rates steady tomorrow.
RBNZ is expected to hike rates by 50 bps on Wednesday.
South Korea’s central bank is likely to raise by 25 bps on Thursday.
Turkey and Nigeria's central banks are expected to hold steady on their interest rates this week.

SA has the 30th highest Covid caseload, at 3.929 million; 3,220 new cases were reported yesterday.
18.041 million people, or 45.33% of the SA adult population, have been fully vaccinated.

S&P Global Ratings has unexpectedly revised its outlook on SA’s sovereign credit ratings to positive, from stable.
It signalled that the next move could be a ratings upgrade.
It cited “expectation of favourable terms of trade, a path toward contained fiscal expenditure, and the implementation of some structural reforms” as drivers.
The agency added that all that may “lead to a continued easing of fiscal and external pressures”.
Stage 2 loadshedding is likely to continue in the evenings this week.
The SARB’s leading indicator for March is due this week; the indexy slipped to 127.2 pts in February, from 127.3 pts in January.
The April PPI likely increased to 12% y/y, from 11.9% y/y in March; PPI likely moderated to 0.8% m/m in April, from 2.5% m/m in March.

Brent crude oil is currently at $113.43/bbl; ($112.55/bbl*).
Gold is at $1854/oz ($1846/oz*).
SA CDS 273bps*, Brazil 246bps* and Turkey 717bps*.
Yields: US 10yr at 2.81%*, German bund at 0.944%* and SA 10-year generic at 10.19%*, SA’s R186 at 8.19%*.

* Denotes Friday’s close.

Key events and data:

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