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In the loop 20 May 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R15.80/$, after closing stronger yesterday (R15.84/$*).
  • EM currencies were mixed yesterday; the RUB (+4.4%), CLP (+2.0%) and ZAR (+1.1%) were the biggest gainers; the KRW (-0.8%), IDR (-0.3%) and ARS (-0.2%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • The People’s Bank of China has cut its five-year loan prime rate, a reference for home mortgages, to 4.45%, from 4.6%.
  • This should boost loan demand, with both consumer and business confidence having been battered by Covid lockdowns and a downturn in the property sector.
  • The cut will be applied to new mortgages immediately; existing mortgages will only be repriced next year at the earliest.
  • Japan’s CPI increased to 2.5% y/y in April, from 1.2% y/y in March.
  • Core CPI increased more than expected, to 2.1% y/y in April, from 0.8% y/y in March, thereby now exceeding the BOJ's target.
  • However, the BOJ is unlikely to adjust policy just yet.
  • Governor Haruhiko Kuroda would want to “see the target being met on a sustainable basis”.
  • UK GfK consumer confidence fell to -40 pts in May, the lowest in 48 years, from -38 pts in April.
  • This comes as the cost of living continues to surge.
  • UK retail sales, including fuel, may have contracted further, by 7.0% y/y in April, after having declined by 0.9% y/y in March.
  • On a m/m basis, retail sales may have contracted by 0.3% y/y in April, following a 1.4% y/y decline in March.
  • Cost-of-living conditions worsened further in April, with a hike in energy bills as well as tax increases.
  • Consumer spending faces further pressure in the coming months.
  • SA has the 30th highest Covid caseload, at 3.915 million; 7,238 new cases were reported yesterday.
  • 18.025 million people, or 45.29% of the SA adult population, have been fully vaccinated.
  • Brent crude oil is down this morning, and up by 43.5% year-to-date.
  • The gold price is up this morning, and up by 0.8% year-to-date.
  • Brent crude oil is currently at $111.61/bbl; ($112.04/bbl*).
  • Gold is at $1844/oz ($1843/oz*).
  • SA CDS 279bps*, Brazil 251bps* and Turkey 729bps*.
  • Yields: US 10yr at 2.83%*, German bund at 0.949%* and SA 10-year generic at 10.29%*, SA’s R186 at 8.26%*.

* Denotes yesterday’s close.

Key events and data: 

  • 08h00: UK retail sales (April)
  • 13h00: Eurozone consumer confidence (May)

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