In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.39/$, after closing weaker yesterday (R16.40/$*).
• EM currencies were mixed yesterday; the COP (+1.4%) and RUB (+1.1%) were the biggest gainers; the BRL (-0.9%), INR (-0.6%) and THB (-0.5%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

• Iran war: US and Iranian officials held indirect technical talks in Doha under Qatari and Pakistani mediation.
• The discussions were aimed at consolidating the June ceasefire arrangement, reopening commercial shipping through the Strait of Hormuz, and laying the groundwork for a broader peace agreement.
• Both sides have reported “positive progress”.

• ECB Forum: ECB President Christine Lagarde remarked that risks to both inflation and economic growth in the Eurozone have become more balanced following the recent decline in energy prices. 
• Lagarde noted that, with oil prices falling to around $72/bbl in June, from around $120/bbl in March, policymakers should be prepared to use a broader range of tools to assess price developments. 
• ECB Vice President Boris Vujcic added that the ECB could wait until updated macroeconomic projections are released in September before deciding on its next policy move.

• BOE Governor Andrew Bailey cautioned that it is premature to consider interest rate cuts at the next policy meeting.
• He warned that households have yet to experience the full economic impact of the Iran conflict. 
• Bailey said reductions in borrowing costs are currently “off the table”, despite easing inflation risks following the sharp decline in energy prices. 
• He also warned of a delayed pass-through effect from the conflict due to the UK's energy price cap, which limits the amount suppliers can charge households for gas and electricity.

• US Fed Chair Kevin Warsh yesterday noted that risks to the inflation outlook have eased in recent weeks. 
• He reiterated his commitment to returning inflation to the central bank's 2% target and stressed the Fed's independence in determining the appropriate policy path.
• Warsh emphasised that the Fed remains focused on delivering price stability and repeated that he would not provide any forward guidance on upcoming interest rate decisions. 
• He added that the central bank would chart its own course based on incoming economic data.

• The US non-farm payrolls for June are due for release today; payrolls are expected to have increased by 113k in June, after having increased by 172k in May.
• Government jobs are expected to make a substantial contribution, as well as healthcare and education.
• The unemployment rate is likely to have remained unchanged, at 4.3%.
• Factory orders are likely to have fallen by 2.0% m/m in May, following a 4.8% m/m increase in April.

• Locally, the electricity production and consumption release for May is due for release today.

• Brent crude is down this morning, and up by 16.5% year-to-date.
• The gold price is up this morning, and down by 6.2% year-to-date.

• Brent crude oil is currently at $70.88/bbl; ($71.57/bbl*).
• Gold is at $4053/oz ($4030/oz*).
• SA CDS 126bps*, Brazil 125bps* and Turkey 223bps*.
• Yields: US 10yr at 4.47%*, German bund at 2.87%*, SA 10-year generic at 8.41%*, SA's R2035 at 8.24%*.

* Denotes yesterday's close. 

Key events and data:

• 11h00: Eurozone unemployment rate (May)
• 13h00: SA electricity production and consumption (May)
• 14h30: US non-farm payrolls (June), unemployment rate (June), average hourly earnings (June), initial jobless claims (27 June)
• 16h00: US factory orders (May), durable goods orders (May – final)

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