In the loop

What you should know this morning:

• The rand is stronger this morning, at R17.82/$, after closing weaker yesterday (R17.85/$*).
• EM currencies were mixed yesterday; the BRL (+0.4%), CLP (+0.4%) and RUB (+0.2%) were the biggest gainers; the ARS (-1.0%), PLN (-0.5%) and CZK (-0.5%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

• CPI in Japan has met expectations, coming in at 3.3% y/y in June, from 3.2% y/y in May.
• CPI, excluding fresh food, came in at 3.3% y/y in June, from 3.7% y/y in May.
• Despite the moderation, today’s data supports the case for the BOJ to hike its benchmark interest rate further.

• The US NAHB housing market index increased in July, to 33 (one of the lowest readings since the end of 2022), from 32 in June.
• Notably, 38% of respondents reported cutting prices in July.
• This signals that buyers are lacking motivation amid limited affordability.
• Housing starts and building permits for June are due out today.
• Housing starts are likely to have increased in June, while building permits are expected to have slipped.
• The University of Michigan sentiment index for July is also on the cards today.
• The sentiment index is likely to have improved to 61.5 in July, from 60.7 in June.

• San Francisco Fed President Mary Daly has commented that it would be reasonable for policymakers to plan for two interest rate cuts this year.
• She noted that the Fed should not wait too long before trimming rates further.
• She added that businesses have been “tolerating” the president’s tariffs.
• In addition, consumers are still spending despite the uncertain environment. 
• This has allowed the Fed to maintain rates, while inflation moves towards the 2% target.
• Daly emphasized though that the Fed should caution against waiting for too long before cutting rates.
• She commented that, should the Fed wait until inflation is at the 2%, it would have "likely injured the economy in some way that was completely unnecessary".
• Fed Governor Christopher Waller said policymakers should cut interest rates to support a labour market that is showing signs of weakness.
• Waller argued that price pressures stemming from Trump’s sweeping tariffs should not lead to a persistent inflation problem but only a temporary spike.

• Several policymakers recently signalled that they aren't yet ready to begin cutting rates.
• Fed Governor Adriana Kugler yesterday remarked that the Fed should keep the Fed funds rate steady “for some time”.
• She cited accelerating inflation as tariffs start to push up prices.
• Kugler added that the “still-restrictive policy stance is important to keep longer-run inflation expectations anchored”.

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

• Brent crude is down this morning, and down by 6.5% year-to-date.
• The gold price is down this morning, and up by 27.2% year-to-date.

• Brent crude oil is currently at $69.79/bbl; ($69.52/bbl*).
• Gold is at $3335/oz ($3338/oz*).
• SA CDS 194bps*, Brazil 148bps* and Turkey 291bps*.
• Yields: US 10yr at 4.45%*, German bund at 2.67%*, SA 10-year generic at 10.02%*, SA’s R2035 at 9.94%*.

* Denotes yesterday’s close.

Key events and data: 

• 10h00: Eurozone current account (May)
• 14h30: US housing starts (June), building permits (June)
• 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (July)

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