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In the loop 01 August 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R16.64/$, after closing weaker on Friday (R16.62/$*).
  • EM currencies were mixed on Friday; the COP (+1.8%), PHP (+1.2%) and PLN (+1.1%) were the biggest gainers; the RUB (-1.3%), ZAR (-0.5%) and ARS (-0.1%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.   
  • China’s manufacturing PMI slipped into contraction, to 49 in July, from 50.2 in June, due to widespread lockdowns.
  • The manufacturing garage is now at its lowest since 2008. 
  • The non-manufacturing PMI also weakened in July, albeit still in expansion; it slipped to 53.8 in July, from 54.7 in June.
  • China’s Covid Zero policy and the property sector's woes remain huge drags on this economy.
  • Minneapolis Fed President Neel Kashkari has reiterated the Fed's commitment to bringing down demand in order to reach the bank’s 2% inflation target
  • Kashkari noted that the Fed would do whatever necessary to achieve that, but that the Fed is a long way away from achieving that inflation target.
  • Inflation is being sped up by supply chains being disrupted by the war in Ukraine, and other factors.
  • The US July jobs report is due out this week; non-farm payrolls are expected to have increased by 250k in July, following an increase of 372k in June.
  • The unemployment rate is expected to have remained unchanged at a near a five-decade low of 3.6% in July. 
  • Job openings numbers this week may also underscore a tight US labour market. 
  • The Fed's Loretta Mester, James Bullard and Charles Evans will comment on the US economy and monetary policy this week.
  • The BOE will meet this week and is expected to hike rates by 50 bps, the biggest hike since 1995, as the bank tries to tame inflation.
  • The softening growth outlook might then however prompt the BOE to revert to more traditional 25 bps increments after this week’s meeting.
  • German industrial production figures for June this week are expected to have been impacted by supply issues related to Russia’s invasion of Ukraine.
  • The Reserve Bank of Australia will meet tomorrow and is expected to raise rates by 50 bps.
  • Brazil is expected to raise the Selic rate by 50 bps on Wednesday.
  • Locally, the BER manufacturing PMI for July, due out today, is expected to have slipped to 50.3, from 52.2 in June.
  • Naamsa vehicle sales, also due out today, is expected to have increased by 14.8% y/y in July, following June’s increase of 7.6% y/y.
  • The industry-wide PMI is due out on Wednesday; it is expected at 50.5 in July, from 52.5 in June.
  • The electricity production and consumption data releases for June are also due out this week.
  • The SARB’s gross and net reserves for July are due out on Friday.
  • Brent crude oil is down this morning, and up by 32.3% year-to-date.
  • The gold price is down this morning, and down by 3.8% year-to-date.
  • Brent crude oil is currently at $102.89/bbl; ($110.01/bbl*).
  • Gold is at $1760/oz ($1765/oz*).
  • SA CDS 301bps*, Brazil 274bps* and Turkey 822bps*.
  • Yields: US 10yr at 2.64%*, German bund at 0.82%* and SA 10-year generic at 10.80%*, SA’s R186 at 8.91%*.

* Denotes Friday’s close.

Key events and data: 

  • 10h00: Eurozone S&P Global manufacturing PMI (July – final)
  • 10h30: UK S&P Global manufacturing PMI (July – final)
  • 11h00: Eurozone unemployment rate (June)
  • 11h00: SA BER manufacturing PMI (July)
  • 15h45: US S&P Global manufacturing (July – final)
  • 16h00: US ISM manufacturing (July)
  • SA Naamsa vehicle sales (July)

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