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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