Closing the loop
- The rand is weaker at R16.81/$ (R16.65/$*) today; it ranged between R16.55/$ and R16.87/$.
- The currency is above its 50-day, 100-day and 200-day moving averages (R16.33/$, R15.83/$ and R15.66/$).
- EM currencies are mixed today; the RUB (+2.0%), THB (+1.3%) and KRW (+0.9%) are the biggest gainers; the COP (-1.2%), ZAR (-1.0%) and COP (-1.0%) are the biggest losers.
- US non-farm payrolls for July significantly overshot expectations and increased by 528k from an upwardly revised increase of 398k in June.
- Payrolls increased in accommodation and food services, health care and professional and business services.
- The unemployment rate fell to 3.5% in July, matching a five-decade low, from 3.6% in June.
- Wage growth accelerated in July while the labour force participation rate eased during the month.
- The data signals strong labour demand despite the economy slowing.
- The data may also give the Fed reason to continue with its steep interest rate increases to try and curb inflation.
- Fed Chair Jerome Powell indicated last week that the Fed could raise rates by 75 bps for a third time at their next meeting in September.
- BOE Governor Andrew Bailey has rejected accusations that the central was too slow in raising interest rates.
- The governor warned yesterday that inflation is likely to peak at 13.3% in October.
- The UK’s business and energy secretary has since suggested that the BOE has not done enough to bring down inflation.
- The secretary noted that the bank should have acted sooner and that employing the current policy will not likely fix the problem.
- He expressed concern that the UK would have the slowest growth of any of the G7 economies next year, according to the IMF.
- A UK report by an insolvency specialist has indicated that the number of UK businesses in “critical financial distress” has increased by more than a third over the past year.
- The report cited higher labour, material and energy prices, as well as the withdrawal of government-backed Covid support programmes as strains on businesses.
- It was reported that 1,957 UK businesses were in critical financial distress in Q2:22, up 37% y/y.
- Locally, the SARB’s gross reserves increased to $59.51bn in July from $58.92bn in June.
- Net reserves slipped marginally to $53.74bn in July from R53.81bn in June.
- Eskom will implement Stage 2 loadshedding over the weekend from 4pm to midnight.
- The oil price is up by 1.6% today, and up by 22.8% in the year-to-date.
- The gold price is down by 0.8% today, and down by 2.8% in the year-to-date.
- Brent crude oil is at $95.96/bbl ($94.12/bbl*).
- Gold price is at $1777/oz ($1790/oz*).
- SA CDS is at 277bps (269bps*), Brazil 271bps (273bps*), Turkey 736bps (729bps*).
- Yields: US 10yr at 2.83% (2.68%*), German bund at 0.93% (0.80%*) and SA 10-year generic at 10.74% (10.67%*), SA’s R186 is at 8.90% (8.82%*).
- The JSE ALSI is up by 1.0% today (+0.2%*).
* Denotes yesterday’s close.
Key events and data:
- On Sunday: China trade balance (July)
- On Monday: 01h50: Japan current account and trade balances (June)
- 10h30: Eurozone Sentix investor confidence (August)