In the loop

What you should know this morning:

• The rand is weaker this morning, at R18.25/$, after closing weaker yesterday (R18.21/$*).
• EM currencies were mixed yesterday; the ARS (+2.4%), BRL (+1.5%) and CLP (+1.2%) were the biggest gainers; the RUB (-2.4%), HUF (-1.5%) and CZK (-1.3%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

• US President Trump yesterday announced a trade framework with the UK, hailing it as a “breakthrough” and a “tremendous trade deal for both countries”.
• US officials are optimistic that this may unlock other deals to expand market access for US goods.
• The trade agreement would allow the UK to fast-track US items through their customs process. 
• It is also expected to reduce barriers on “billions of dollars” of agricultural, chemical, energy and industrial exports, including beef and ethanol.
• Included in the agreement is the reduction of automotive tariffs to 10%, and metals duties will be reduced to zero.
• President Trump and UK Prime Minister Keir Starmer noted that the final details of the trade pact are still under negotiation, with many specifics still needing to be resolved.
• The two sides currently disagree on some of the key details.

• The Trump administration is considering a significant tariff reduction in talks with China, which will kick off tomorrow. 
• The talks will focus on “airing grievances”; the goal is to de-escalate the trade war. 
• If all goes well, it could lead to tariff cuts as early as next week.
• China's exports rose in April, signalling resilience despite the tariff war.
• China's exports increased by 8.1% y/y in April, to $315.69bn; imports were down by 0.2% y/y in April.

• President Trump yesterday criticised Fed Chair Jerome Powell for refusing to lower interest rates.
• President Trump had in recent weeks threatened to fire Powell but then backed away from that threat.
• Powell noted that the Fed would wait for further clarity on where tariffs may end up as well as assess their effect on prices and jobs. 
• He added that, at that point the central bank can act as needed, and potentially aggressively.

• Several Fed policymakers are due to comment on the US economy and monetary policy later today.

• The EU has threatened to impose tariffs on €95bn of US exports, including cars and vehicle parts, if talks with the US fail to resolve their trade conflict.
• The European Commission (EC) noted that it would initiate a dispute at the World Trade Organization if the US does not reduce tariffs.
• Tariffs of 25% on EU steel, aluminium and cars remain in place.
• The EC noted that it remains “fully committed to finding negotiated outcomes with the US”.

• Locally, it’s a quiet day as far as data releases are concerned. 

• Brent crude is up this morning, and down by 15.3% year-to-date.
• The gold price is up this morning, and up by 26.6% year-to-date.

• Brent crude oil is currently at $63.20/bbl; ($62.84/bbl*).
• Gold is at $3321/oz ($3310/oz*).
• SA CDS 228bps*, Brazil 181bps* and Turkey 336bps*.
• Yields: US 10yr at 4.37%*, German bund at 2.53%*, SA 10-year generic at 10.58%*, SA’s R2035 at 10.54%*.

* Denotes yesterday’s close.

Key events and data: 

• No economic data releases.

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