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In the loop 01 August 2024

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R18.24/$, after closing stronger yesterday (R18.19/$*).
  • EM currencies were mixed yesterday; the MXN (+1.4%), CLP (+1.3%) and KRW (+1.0%) were the biggest gainers; the BRL (-0.7%) and TRY (-0.1%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
 
  • The US FOMC yesterday kept the Fed funds rate unchanged, as expected.
  • The policy committee voted unanimously to leave the benchmark rate in a range of 5.25% to 5.5%.
  • The central bank, however, signalled they are moving closer to lowering borrowing costs on the back of easing inflation and a cooling labour market.
  • The Fed noted that it remains "attentive to the risks to both sides of its dual mandate”.
  • The Fed also acknowledged that there has been some further progress toward the bank’s 2% inflation target.
  • Fed Chair Jerome Powell commented that, as the economy evolves, monetary policy would adjust.
 
  • The UK housing market is likely to show signs of resilience in July despite affordability issues.
  • The Nationwide house price index is expected to show that house prices increased by 1.9% y/y in July, after having increased by 1.5% y/y in June.
  • Housing activity is expected to pick up pace further once the BOE commences its rate-cutting cycle.
  • The BOE has begun its policy meeting and will announce its rate decision later today.
  • The central bank is largely expected to trim its benchmark interest rate by 25 bps, to 5.0%.
  • The BOE has shown its willingness to tolerate upside surprises in inflation, which supports the case for a rate cut.
  • The BOE is likely to indicate that further policy decisions would depend on the persistence of inflation.
 
  • The UK Decision Maker Panel (DMP) 3m and 1yr inflation expectations for July are also on the cards today.
  • The 3m ahead inflation expectations came in at 3.9% in June.
  • One-year ahead inflation expectations came in at 2.8% in June.
 
  • Locally, the BER manufacturing PMI for July is due for release today; the index is expected to have increased to 48.0 in July, from 45.7 in June.
  • The July Naamsa vehicle sales likely declined by 9.4% y/y in July, after having fallen by 14.0% y/y in June.
 
  • Brent crude is up this morning, and up by 5.9% year-to-date.
  • The gold price is up this morning, and up by 18.5% year-to-date.
 
  • Brent crude oil is currently at $81.48/bbl; ($80.72/bbl*).
  • Gold is at $2445/oz ($2426/oz*).
  • SA CDS 196bps*, Brazil 157bps* and Turkey 267bps*.
  • Yields: US 10yr at 4.02%*, German bund at 2.30%*, SA 10-year generic at 10.75%*, SA’s R2030 at 9.39%*.
 

* Denotes yesterday’s close.

Key events and data:

  • 08h00: UK Nationwide house price index (July)
  • 10h00: Eurozone HCOB manufacturing PMI (July – final), ECB publishes Economic Bulletin
  • 10h30: UK S&P Global manufacturing PMI (July -final)
  • 11h00: Eurozone unemployment rate (June)
  • 11h00: SA BER manufacturing PMI (July)
  • 13h00: SA electricity production and consumption (June)
  • 13h00: UK BOE interest rate decision - 25 bps cut expected
  • 14h30: US initial jobless claims (27 July)
  • 15h00: UK Decision Maker Panel (DMP) 3m and 1yr inflation expectations (July)
  • 15h45: US S&P Global manufacturing PMI (July – final)
  • 16h00: US ISM manufacturing (July)
  • SA Naamsa vehicle sales (July)
 

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