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 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:

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