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In the loop 22 June 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R15.98/$, after closing stronger yesterday (R15.90/$*).
  • EM currencies were mixed yesterday; the BRL (+1.3%), RUB (+1.2%) and the HUF (+0.9%) were the biggest gainers; the COP (-3.0%), ARS (-0.6%) and PHP (-0.4%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.   
  • Richmond Fed President Thomas Barkin has urged the bank to hike rates as fast as possible without causing undue harm to either financial markets or the US economy. 
  • Barkin noted that inflation is broad-based and that rates are currently still well below normal. 
  • He further noted that rates may need to be raised beyond neutral and into restrictive territory; policymakers would therefore need to be flexible.
  • Barkin declined to say whether he would support another 75 bps hike at the July FOMC meeting.
  • Fed Chair Jerome Powell is expected to testify before lawmakers this evening with a detailed explanation for last week's 75 bps rate hike. 
  • He is also likely to face questions on quantitative easing.
  • Investors will watch out for the likelihood of another 75 bps hike in July.
  • UK CPI for May today is expected at 9.1% y/y, from 9.0% y/y in April due to rising fuel and food prices.
  • Higher prices for goods and energy have been the main drivers of UK inflation of late.
  • However, on a m/m basis, CPI likely eased to 0.7% in May, from 2.5% in April. 
  • CPI will likely peak close to 10% in Q4:22; the headline rate is expected to moderate sharply in 2023. 
  • SA has the 30th highest Covid caseload, at 3.986 million; 1,087 new cases were reported yesterday.
  • 18.292 million people, or 45.96% of the SA adult population, have been fully vaccinated.
  • SA May CPI is due out today; the headline rate likely reached the upper limit of the target ceiling of 6.0% y/y, from 5.9% y/y in April.
  • Bloomberg consensus for May is for 6.1% y/y and 0.3% m/m, from 0.6% m/m in April.
  • Brent crude oil is down this morning, and up by 43% year-to-date.
  • The gold price is down this morning, and down by 0.2% year-to-date.
  • Brent crude oil is currently at $111.22/bbl; ($114.65/bbl*).
  • Gold is at $1825/oz ($1836/oz*).
  • SA CDS 281bps*, Brazil 284bps* and Turkey 808bps*.
  • Yields: US 10yr at 3.27%*, German bund at 1.77%* and SA 10-year generic at 10.63%*, SA’s R186 at 8.57%*.

* Denotes yesterday’s close.

Key events and data: 

  • 08h00: Japan machine tool orders (May)
  • 08h00: UK CPI, PPI, RPI (May)
  • 10h00: SA CPI (May)
  • 10h30: UK house price index (April)
  • 16h00: Eurozone consumer confidence (June preliminary)

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