In the loop

What you should know this morning:

• The rand is weaker this morning, at R17.64/$, after closing weaker yesterday (R17.63/$*).
• EM currencies were mixed yesterday; the RUB (+0.3%), HUF (+0.2%) and HKD (+0.2%) were the biggest gainers; the COP (-0.7%), BGN (-0.5%) and BRL (-0.4%) were the biggest losers.
• Asian equity markets Nikkei, Hang Seng and Shanghai Composite are up.

• China’s industrial profit growth fell by 1.5% y/y in July, following a 4.3% y/y decline in June.
• Profits increased in the manufacturing sector; producers of raw materials, steelmakers and petroleum refiners moved from losses into profits in July.

• Fed Governor Lisa Cook has said that she will be suing President Trump over his “illegal” attempts to fire her.
• Cook has denied the allegations of mortgage fraud, and has not been charged.
• Cook’s lawyer noted that Trump had “no authority” to remove her from her position on the board of the Fed.
• The lawyer added that Trump’s attempts to oust Cook are based solely on a referral letter, and lacks any factual or legal basis.
• Cook remarked that she will be continuing with her duties to help the US economy, as she has been doing since 2022.

• US Treasury Secretary Scott Bessent has defended President Trump’s moves to remove Cook as a Fed Governor at a cabinet meeting.
• Bessent noted that the Fed’s “independence comes from a political arrangement between itself and the American public”.
• He added that having the trust of the public is the “only thing that gives it credibility”.
• Bessent remarked that President Trump is restoring trust to government by “weeding out the waste, fraud and abuse”.
• He also noted that he expects to see a bigger increase in tariff revenue from August to September.
• He said that it is likely that the US is potentially heading towards $1 trillion in tariff revenue.

• ECB policymakers yesterday expressed concern about the potential spillover effects from a political threat to the independence of the Fed. 
• Policymakers noted that President Trump’s actions could set a “dangerous precedent”.
• It could also likely have a “tangible impact on their own policymaking”.
• The ECB’s monetary policy decisions are influenced by the interest rate course charted by the Fed.
• Governing Council member Yannis Stournaras noted that “the implications will come sooner rather than later”.
• ECB President Christine Lagarde commented that, when the independence of a central bank is threatened, monetary policy “becomes dysfunctional” and “it starts doing things that it shouldn’t do”.

• The BOE’s Catherine Mann yesterday called for the benchmark interest rate to remain on hold at the next monetary policy meeting.
• Mann noted that “a more persistent hold” on interest rates “is appropriate right now”.
• She added that her base case is for elevated price pressures to last.
• Further, she reiterated her calls for an activist approach to monetary policy to prevent inflation from persisting in the future.
• Mann highlighted concerns over rising household inflation expectations and the surge in grocery bills.

• Locally, it’s a quiet day as far as data releases are concerned.

• Brent crude is up this morning, and down by 9.9% year-to-date.
• The gold price is down this morning, and up by 28.7% year-to-date.

• Brent crude oil is currently at $67.23/bbl; ($67.22/bbl*).
• Gold is at $3377/oz ($3393/oz*).
• SA CDS 175bps*, Brazil 140bps* and Turkey 265bps*.
• Yields: US 10yr at 4.26%*, German bund at 2.72%*, SA 10-year generic at 9.67%*, SA’s R2035 at 9.57%*.

* Denotes yesterday’s close.

Key events and data: 

• 13h00: US MBA mortgage applications (22 August)

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