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In the loop 02 August 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R16.56/$, after closing stronger yesterday (R16.46/$*).
  • EM currencies were mixed yesterday; the THB (+2.2%), HUF (+1.8%) and PLN (+1.0%) were the biggest gainers; the ARS (-0.5%), RUB (-0.4%) and KRW (-0.4%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.   
  • The Reserve Bank of Australia (RBA) has hiked rates by 50 bps, to 1.85%, as expected.
  • Further tightening is “likely in the coming months” as the RBA tries to tame inflation and normalise monetary conditions.
  • The RBA has now raised rates by a cumulative 175 bps since May.
  • The bank, with a frequent policy meeting schedule, could hike rates to above neutral by year end.
  • Governor Philip Lowe is “confident that the economy can cope” with such a sharp tightening cycle.
  • The bank’s inflation forecast now stands at 7.75%, and the RBA expects inflation to peak later this year.
  • The US manufacturing PMI slipped to 52.2 pts in July, from 52.7 pts in June.
  • The ISM manufacturing index also slipped in July to its lowest level since June 2020, to 52.8 pts, from 53.0 pts in June.
  • More factories have scaled back production because of shrinking orders and rising inventories.
  • New orders too declined, while production fell during the month; the employment index rose in July, albeit still in contraction for a third consecutive month.
  • The ISM and S&P Global manufacturing PMI data are consistent with a general slowdown around the world. 
  • The US JOLTS job openings report for June, due out today, will likely reflect fewer job openings as optimism about the US economy deteriorates.
  • Fed Chair Jerome Powell previously indicated the number of job openings per unemployed person as a measure of labour-market tightness.
  • This ratio is expected to have eased, from 1.9 in May.
  • Locally, it’s a quiet day as far as data releases are concerned.
  • Brent crude oil is down this morning, and up by 27.7% year-to-date.
  • The gold price is unchanged this morning, and down by 3.0% year-to-date.
  • Brent crude oil is currently at $99.30/bbl; ($100.03/bbl*).
  • Gold is at $1773/oz ($1773/oz*).
  • SA CDS 288bps*, Brazil 274bps* and Turkey 787bps*.
  • Yields: US 10yr at 2.54%*, German bund at 0.78%* and SA 10-year generic at 10.90%*, SA’s R186 at 9.04%*.

* Denotes yesterday’s close.

Key events and data: 

  • 08h00: UK nationwide house prices (July)
  • 16:00: US JOLTS job openings (June)

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