In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R18.30/$, after closing stronger yesterday (R18.35/$*).
- EM currencies were mixed yesterday; the ZAR (+0.6%), RUB (+0.4%) and MYR (+0.3%) were the biggest gainers; the HUF (-0.6%), MXN (-0.5%) and COP (-0.5%) were the biggest losers.
- Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
- China’s manufacturing PMI slipped further in July, to 49.4, from 49.5 in June.
- The data adds to evidence of weakness in an area on which China is relying to drive its economy.
- The services PMI slipped to 50.2 in July, from 50.5 in June.
- The composite PMI also came in lower, at 50.2 in July, from 50.5 in June.
- The BOJ has hiked its benchmark interest rate to 0.25%, from 0.1%.
- The BOJ noted that the decision came as prices have been developing broadly in line with forecasts.
- However, the central bank highlighted that it would need to pay attention to upside risks to the inflation forecasts.
- The bank also unveiled plans to reduce bond-buying.
- Eurozone CPI data for July will likely show headline inflation staying unchanged and the core measure falling only slightly in July.
- Headline inflation is expected to come in at 2.5% y/y in June, the same as in May.
- On a m/m basis, CPI is likely to have declined by 0.1% in June, following a 0.2% increase in May.
- Core CPI is expected to have moderated to 2.8% y/y in June, from 2.9% y/y in May.
- The US Fed’s FOMC meeting is in the spotlight today.
- While the Fed is expected to keep the Fed funds rate unchanged, it will likely signal a rate cut soon.
- Investors will keep an eye Fed Chair Jerome Powell’s comments after the meeting; Powell may signal a readiness to cut as soon as September.
- The US private sector ADP employment report, the precursor to the non-farm payrolls report, is also on the cards today.
- Private payrolls are likely to have to have increased by 150k in July, matching June’s increase.
- Locally, the June trade balance is due out today; a trade surplus of R22.3bn is expected, from R20.1bn in May.
- There has been a notable improvement in the trade balance so far this year (with a surplus of R26.6bn from January to May 2024, vs R6.7bn in the comparable period last year).
- This is significantly better than many investors’ earlier expectation for a rapid widening of the external balances.
- Brent crude is up this morning, and up by 3.6% year-to-date.
- The gold price is up this morning, and up by 17.3% year-to-date.
- Brent crude oil is currently at $79.82/bbl; ($78.63/bbl*).
- Gold is at $2418/oz ($2399/oz*).
- SA CDS 198bps*, Brazil 158bps* and Turkey 262bps*.
- Yields: US 10yr at 4.13%*, German bund at 2.34%*, SA 10-year generic at 10.84%*, SA’s R2030 at 9.49%*.
* Denotes yesterday’s close.
Key events and data:
- 11h00: Eurozone CPI (July)
- 13h00: US MBA mortgage applications (26 July)
- 14h00: SA trade balance (June)
- 14h15: US ADP employment (July)
- 20h00: US FOMC interest rate decision – no change expected
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