In the loop

What you should know this morning:

• The rand is stronger this morning, at R17.80/$, after closing stronger yesterday (R17.95/$*).
• EM currencies were mixed yesterday; the BRL (+0.9%), PEN (+0.8%) and ZAR (+0.8%) were the biggest gainers; the MYR (-0.9%), KRW (-0.8%) and PHP (-0.8%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• Iran yesterday launched retaliatory missile strikes at US air bases in Qatar and Iraq in response to the US attacks over the weekend.
• Following those retaliatory attacks, President Trump announced that Israel and Iran had agreed to what he called a “complete and total” ceasefire. 
• The ceasefire has eased fears that a conflict between the two might escalate. 

• ECB Governing Council member Joachim Nagel has remarked that the ECB should not commit to a certain interest rate path.
• This comes as US trade policy and the situation in the Middle East are clouding the outlook.
• He added that “not only is it unclear how strong the effects could be, but it is ultimately even uncertain” whether US tariffs will be inflationary or disinflationary.
• Nagel commented that it would be best for the central bank to remain flexible and data-dependent with regard to monetary policy.
• He also remarked that the ECB is a “good position with regard to interest rates to await further developments in inflation”.

• Fed Vice Chair for supervision Michelle Bowman yesterday noted that the Fed could consider an interest rate cut at the July FOMC meeting, were conditions appropriate.
• Bowman noted that inflation had either declined or come in below expectations over the past few months.
• She noted that the bank should recognize that inflation appears to be on a sustained path towards its 2% inflation target.
• She also added that “there will likely be only minimal impacts on overall core PCE inflation from changes to trade policy”.
• Bowman commented that she believes that negotiations will likely lower tariff rates from their current levels and thus she expects the impact on inflation to be temporary.
• Investors will keep an eye on core PCE data out on Friday.
• The core PCE deflator is expected to have increased by 0.1% m/m in May, matching the April increase.

• Chicago Fed President Austan Goolsbee has commented that the Fed could resume interest rate cuts if the impact on inflation from tariffs remains subdued.
• He added there has been less immediate pass-through of the levies than before. 
• Fed policymakers kept rates unchanged last week as they wait to see the economic impact of Trump’s policies. 

• The US Conference Board consumer sentiment index for June, due out today, likely increased to 99.8, from 98.0 in May.
• The S&P CoreLogic house price index is likely to have increased by 3.9% y/y in April, after having increased by 4.1% y/y in May.
• The FHFA house price index for April, also due out today, likely stagnated, aftre having declined by 0.1% m/m in March.

• Locally, the SARB’s leading indicator for April is scheduled for release today; the index increased to 115.4 in March. 
• The Q1:25 non-farm payrolls are also due out; payrolls increased by 0.1% q/q in Q4:24.

• Oil prices fell following the announcement of a ceasefire between Israel and Iran.
• Brent crude is down this morning, and down by 5.0% year-to-date.
• The gold price is down this morning, and up by 27.2% year-to-date.

• Brent crude oil is currently at $69.35/bbl; ($71.48/bbl*).
• Gold is at $3337/oz ($3389/oz*).
• SA CDS 196bps*, Brazil 156bps* and Turkey 307bps*.
• Yields: US 10yr at 4.34%*, German bund at 2.50%*, SA 10-year generic at 10.11%*, SA’s R2035 at 10.05%*.

* Denotes yesterday’s close.

Key events and data: 

• 09h00: SA SARB leading indicator (April)
• 11h30: SA non-farm payrolls (Q1:25)
• 14h30: US current account balance (May)
• 15h00: US FHFA house price index (April), S&P CoreLogic house price index (April)
• 16h00: US Conference Board consumer confidence index (June)

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