In the loop

What you should know this morning:

• The rand is trading at R17.84/$ this morning, after closing stronger yesterday (R17.80/$*).
• EM currencies were mixed yesterday; the KRW (+1.1%), CZK (+1.0%) and RON (+0.6%) were the biggest gainers; the INR (-0.4%), RUB (-0.2%) and TRY (-0.2%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.

• Central bank watch: the Bank of Canada has kept interest rates unchanged for a second consecutive meeting, as expected.
• The ECB will decide on rates today – a cut of 25 bps is widely expected.
• This will see the main refinancing rate down to 2.15% (from 2.40%) and the deposit rate at 2.00% (from 2.25%).
• ECB President Christine Lagarde is likely to maintain a dovish tone and keep the door open to further interest rate cuts later this year.
• Mortgage rates in the region are still rising, on balance, even as official rates have fallen; this as people come to the end of their fixed-rate periods (common for mortgages in the bloc) and have to settle for a higher rate.

• China’s Caixin services PMI for May came in stronger than expected.
• The services PMI rose to 51.1 in May, from 50.7 in April.
• Faster growth in services activity points to improved consumer demand in China.
• Employment grew after two months of contraction, with business confidence strengthening.
• However, new exports business declined for the first time in a year due to the impact of the trade conflict, according to the statement.
• With the Caixin manufacturing PMI earlier slumping from 50.4 in April to 48.3 in May, the composite PMI is down to 49.6 in May (from 51.1 in April).

• US services sector activity disappointed in May.
• The ISM services index unexpectedly dropped to 49.9 in May, signalling contraction, down from 51.6 in April.
• New orders dipped noticeably during the month; the index declined to 46.4 in May, from 52.3 in April.
• Prices paid accelerated more than expected, with the index rising to 68.7 in May, from 65.1 in April.

• The latest Fed Beige Book showed caution among business and households in the face of tariff uncertainties.
• Firms’ responses to higher costs as a result of tariffs were varied; while firms expect prices to rise as a result of tariffs, they expect that the impact won’t necessarily be “strong, significant, or substantial”.
• All Fed districts reported elevated uncertainty, with firms delaying hiring decisions.
• Tomorrow’s non-farm payrolls (NFP) for May will be keenly watched for signs of stress in the US labour market.
• Today sees the release of initial jobless claims for the week ended 31 May.
• US trade balance data for April is also due today.

• Locally, the current account data for Q1:25 will be released by the SARB this morning.
• The current account deficit as a percentage of GDP is likely to have widened, after coming in at 0.4% in Q4:24.
• Electricity production and consumption data for April is also due out today.

• Brent crude is down this morning, and down by 13.3% year-to-date.
• The gold price is down this morning, and up by 28.2% year-to-date.

• Brent crude oil is currently at $64.72/bbl; ($64.86/bbl*).
• Gold is at $3365/oz ($3373/oz*).
• SA CDS 200bps*, Brazil 157bps* and Turkey 299bps*.
• Yields: US 10yr at 4.36%*, German bund at 2.53%*, SA 10-year generic at 10.04%*, SA’s R2035 at 9.98%*.

* Denotes yesterday’s close.

Key events and data:

• 10h30: UK Decision Maker Panel (DMP) 3-month and 1-year inflation expectations (May)
• 11h00: SA current account balance (Q1:25)
• 11h00: Eurozone PPI (April)
• 13h00: SA electricity production and consumption (April)
• 14h15: Eurozone ECB interest rate decision – 25 bps
• 14h30: US trade balance (April), initial jobless claims (31 May)

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