In the loop 08 May 2026

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R16.42/$, after closing stronger yesterday (R16.37/$*).
EM currencies were mixed yesterday; the PHP (+1.6%), HUF (+0.6%) and RUB (+0.4%) were the biggest gainers; the COP (-0.7%), ARS (-0.6%) and KRW (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Iran war: the fragile ceasefire came under renewed strain yesterday after the US and Iran fired missiles in the Strait of Hormuz.
This led to US strikes on Iranian military infrastructure.
President Trump insisted that the ceasefire remained in place but warned that far more forceful military action would follow if Iran rejected the proposed deal.
President Trump also noted that the ceasefire was still in effect and that a deal could be reached any day.

ECB Executive Board member Isabel Schnabel yesterday warned that the ECB might need to raise interest rates if the Iran war has a more persistent impact on inflation.
Schnabel said that if the energy price shock broadens across the economy, monetary policy would need to tighten to prevent second-round effects from threatening medium-term price stability.
She stressed that the ECB “has made clear” it would do whatever is necessary to bring inflation back to its 2% target, from the current 3% level.
The ECB has so far refrained from raising interest rates despite inflation remaining well above target.
Policymakers have preferred to wait for more data while the effects of higher energy prices continue to filter through the economy.
However, ECB President Christine Lagarde recently signalled that a rate hike might come as soon as June.
Several other policymakers have suggested that action next month is now “all but inevitable”.

The NY Fed one-year Inflation expectations came in higher, at 3.64% in April, from 3.42% in February.
The data implies that households expect somewhat stronger near-term price pressures, likely reflecting higher energy costs and supply-chain disruptions linked to the Middle East conflict.
The three-year inflation expectations were unchanged, at 3.1%.
Five-year expectations held steady, at 3.0%, indicating that consumers still view longer-run inflation as relatively anchored.
The survey also showed mixed developments in household price expectations.

New York Fed President John Williams has commented that the Fed remains firmly committed to ensuring inflation returns to the 2% target.
This is despite renewed pressures from higher energy prices and global supply-chain disruptions linked to the conflict in the Middle East.
Williams acknowledged that inflation is likely to remain elevated in the near term, with energy costs and supply bottlenecks posing upside risks.
He stressed that the Fed's current policy stance is well positioned to bring inflation back down over time.

The US non-farm payrolls for April are due for release later today; payrolls are expected to have increased by 65k, after having increased by 178k in March.
The unemployment rate is likely to have remained unchanged, at 4.3%.
The University of Michigan consumer sentiment index, also due today, is likely to have remained below 50 as uncertainty related to the war with Iran persists.
Sentiment and inflation expectations are likely to remain divided along political lines.

Locally, the SARB's gross and net reserves for April are scheduled for release today.
Gross reserves were at $77.76bn in March, and net reserves $73.19bn.

Brent crude oil is currently at $101.23/bbl; ($100.06/bbl*).
Gold is at $4715/oz ($4685/oz*).
SA CDS 144bps**, Brazil 115bps* and Turkey 227bps*.
Yields: US 10yr at 4.38%*, German bund at 3.00%*, SA 10-year generic at 8.71%*, SA's R2035 at 8.55%*.

* Denotes yesterday's close.

Key events and data:

08h00: SA gross and net reserves (April)
14h30: US non-farm payrolls (April), unemployment rate (April)
16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (May)

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