Closing the loop
- The rand is weaker at R16.89/$ (R16.70/$*) today; it ranged between R16.67/$ and R16.94/$.
- The currency is above its 50-day, 100-day and 200-day moving averages (R16.29/$, R15.79/$ and R15.64/$).
- EM currencies are mixed today; the CLP (+0.5%) and PEN (+0.3%) are the biggest gainers; the ZAR (-1.1%), RUB (-0.9%) and MXN (-0.7%) are the biggest losers.
- Turkish CPI increased less than expected in July to 79.6% y/y from June’s 78.6% increase.
- On a m/m basis, CPI was up by 2.4% in July after having increased by close to 5% in June.
- Turkish policymakers are out of sync with the rest of the world in trying to rein in inflation with tighter monetary as they fold to political pressure to keep rates unchanged.
- The Turkish Central Bank Governor noted last week that the new economy model that prioritises production, exports and employment will aid in stabilising prices and the currency.
- The TRY is currently 25.9% weaker against the dollar in the year-to-date.
- Eurozone retail sales fell by 3.7% y/y in June after having increased by 0.4% y/y in May.
- The slippage comes on the back of higher prices and declining consumer confidence.
- The ECB publishes its Economic Bulletin tomorrow.
- We still await the Brazilian Central Bank MPC decision later this evening; the bank is expected to hike the Selic rate by 50 bps to 13.75%.
- The spotlight is on the UK’s BOE MPC interest rate decision tomorrow.
- The bank is expected to hike rates by 50 bps, the biggest hike since 1995, as it 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.
- Locally, the industry-wide PMI overshot expectations in July and increased to a 14-month high to 52.7 pts from 52.5 pts in June.
- The increase, albeit slight, marked the third consecutive increase and came on the back of improving new orders, output and employment in July.
- Uncertain electricity supply continues to pose downside risk on the index in the coming months.
- In addition, consumers and businesses may also start to rein in spending as the impact of higher prices is felt more significantly.
- Eskom implemented Stage 2 loadshedding between 16h00 and midnight over the next two days due to a shortage of generation capacity.
- The electricity production and consumption data releases for June are due out tomorrow.
- The oil price is down by 0.4% today, and up by 28.7% in the year-to-date.
- The gold price is down by 1.0% today, and down by 3.8% in the year-to-date.
- Brent crude oil is at $102.17/bbl ($100.54/bbl*).
- Gold price is at $1759/oz ($1776/oz*).
- SA CDS is at 287bps (292bps*), Brazil 282bps (285bps*), Turkey 779bps (789bps*).
- Yields: US 10yr at 2.81% (2.74%*), German bund at 0.90% (0.82%*) and SA 10-year generic at 10.80% (10.79%*), SA’s R186 is at 8.99% (8.94%*).
- The JSE ALSI is up by 1.0% today (-0.9%*).
* Denotes yesterday’s close.
Key events and data:
- 10h00: Eurozone ECB publishes economic bulletin
- 13h00: UK BOE MPC decision – 50 bp hike expected
- 13h00: SA electricity consumption and production (June)
- 13h30: US trade balance (June)
- 14h30: US initial jobless claims (30 July)