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In the loop 04 August 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R16.76/$, after closing weaker yesterday (R16.81/$*).
  • EM currencies were mixed yesterday; the COP (+0.4%), HUF (+0.4%) and PEN (+0.4%) were the biggest gainers; the ZAR (-0.7%), INR (-0.6%) and PHP (-0.5%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.   
  • The Brazilian Central Bank (BCB) has hiked the Selic rate by 50 bps, to 13.75%, as expected.
  • The BCB left the door open to further rate hikes whilst attempting to anchor inflation expectations.
  • Policymakers will give more emphasis to price forecasts for early 2024 as recent tax changes leave the more near-term estimates in flux.
  • The BCB may, however, hike at a more cautious pace as of the next meeting.
  • The committee remains vigilant, and future policy moves may be adjusted to ensure the convergence of inflation towards target.
  • The BOE’s MPC rate decision is due today: a hike of 50 bps is expected despite the growing risks of a recession.
  • The BOE is aiming to rein in the highest inflation in 40 years.
  • The bank is facing political criticism that it had let prices spiral out of control when Covid lockdowns ended.
  • The BOE is also set to start reversing its $1 trillion stimulus program.
  • Governor Andrew Bailey’s press conference after the announcement will garner investor attention.
  • Several countries’ services PMI data releases were out yesterday.
  • The S&P Global US services PMI fell to 47.3 pts in July, from 52.7 pts in June.
  • The ISM services PMI increased to 56.7 pts in July, from 56.3 pts in June. 
  • The S&P Global services PMI for both the UK and EU too slipped in July.
  • Locally, Eskom has implemented Stage 2 loadshedding from 5am to 4pm; Stage 4 loadshedding will commence at 4pm until midnight. 
  • The electricity consumption and production data releases for June are due out today.
  • Brent crude oil is up this morning, and up by 24.7% year-to-date.
  • The gold price is up this morning, and down by 3.1% year-to-date.
  • Brent crude oil is currently at $96.97/bbl; ($96.78/bbl*).
  • Gold is at $1773/oz ($1759/oz*).
  • SA CDS 285bps*, Brazil 283bps* and Turkey 773bps*.
  • Yields: US 10yr at 2.71%*, German bund at 0.87%* and SA 10-year generic at 10.80%*, SA’s R186 at 8.99%*.

* Denotes yesterday’s close.

Key events and data: 

  • 10h00: Eurozone ECB publishes economic bulletin
  • 13h00: UK BOE MPC decision – 50 bp hike expected
  • 13h00: SA electricity consumption and production (June)
  • 13h30: US trade balance (June)
  • 14h30: US initial jobless claims (30 July)

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