In the loop

What you should know this morning:

• The rand is trading at R18.06/$ this morning, after closing stronger yesterday (R18.06/$*).
• EM currencies were mixed yesterday; the ZAR (+0.9%), MXN (+0.6%) and BRL (+0.3%) gained the most; the PLN (-0.9%), COP (-0.9%) and HUF (-0.4%) lost the most.
• Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng is flat and the Shanghai Composite is down.

• UK inflation data for June is in the spotlight today.
• CPI inflation is expected to have slowed to 1.9% y/y in June, from 2.0% y/y in May.
• On a m/m basis, CPI likely rose to 0.1% m/m in June, after increasing to 0.3% m/m in May.
• The data will be key as the BOE heads into its policy meeting and announce its decision on rates on 1 August.
• While headline inflation has now hit the target of 2%, still-high services inflation is a concern.
• CPI services came in at 5.7% y/y in May, and likely remained high, at 5.6% y/y in June.

• Britain’s new Labour Party government’s plans for the year will be borne out today in the King’s Speech to Parliament.
• Prime Minister Keir Starmer has said that the planned measures would “take the brakes off Britain” and “create wealth for people up and down the country” by spurring economic growth.

• Fed Governor Adriana Kugler, speaking in Washington, repeated her view that rate cuts would likely be appropriate “later this year”.
• She emphasised that Fed decisions would remain data-dependent.
• Kugler noted that there has been “substantial rebalancing” in the labour market.
• “This continued rebalancing suggests that inflation will continue to move down toward our 2% target,” she said.
• According to Kugler, long-run inflation expectations have remained anchored.
• Regarding the challenges faced with economic measurement, she mentioned the Fed as taking advantage of the “explosion” in private sector data, such as restaurant reservations as well as credit and debit card transactions.
• Today sees the release of a set of US activity indicators for June, including housing starts and industrial production.

• Locally, retail trade sales data for May is on the cards today.
• Sales volumes likely contracted by 0.8% m/m in May, from a rise of 0.5% m/m in April.
• In annual terms, sales volume growth is expected to have remained steady, at 0.6% y/y, in May.
• However, real household disposable income is under pressure; growth in compensation has slowed recently.
• Uncertainty heading into the end-May election might also have dampened spending during the month.

• Brent crude is down this morning, and up by 8.6% year-to-date.
• The gold price is up this morning, and up by 19.7% year-to-date.

• Brent crude oil is currently at $83.61/bbl; ($83.73/bbl*).
• Gold is at $2470/oz ($2459/oz*).
• SA CDS 197bps*, Brazil 149bps* and Turkey 260bps*.
• Yields: US 10yr at 4.16%*, German bund at 2.43%*, SA 10-year generic at 10.76%*, SA’s R2030 at 9.54%*.

* Denotes yesterday’s close.

Key events and data:

• 08h00: UK CPI, RPI, PPI (June)
• 10h30: UK house price index (May)
• 11h00: Eurozone CPI (June – final)
• 13h00: SA retail sales (May)
• 13h00: US MBA mortgage applications (12 July)
• 14h30: US building permits, housing starts (June)
• 15h15: US industrial production, manufacturing production, capacity utilisation (June)

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