In the loop 07 July 2026

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R16.24/$, after closing stronger yesterday (R16.21/$*).
EM currencies were mixed yesterday; the BRL (+0.8%), MXN (+0.3%) and ARS (+0.2%) were the biggest gainers; the CLP (-0.9%), THB (-0.6%) and COP (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

Iran war: it's been reported that Iran fired at least two missiles at commercial vessels transiting the Strait of Hormuz last night, testing the late-June ceasefire agreement with the US.
The incident comes as both sides continue negotiations towards a broader peace deal, but with major sticking points, including the release of frozen Iranian assets and Tehran's nuclear programme.

ECB Governing Council member Isabel Schnabel commented yesterday that peace efforts in the Middle East have helped to bring energy prices down rapidly.
Schnabel noted, however, that is hasn't restored the position the world was in before hostilities erupted.
Schnabel remarked that the peace deal is still fragile and that markets continue to point to higher oil prices over longer horizons.
She added that gas prices are still around 40% higher than before the war.
Schnabel also cautioned on dangers still ahead, including the need to refill energy and inventories, strong core inflation momentum, and new shocks such as Europe's heat wave and an AI investment boom.

Fed Governor Christopher Waller commented yesterday that signals from policymakers on the future path of interest rates can play a useful role if done carefully.
Waller noted that forward guidance remains a valuable tool, and it helped to guide the public during the pandemic-era inflation surge that interest rates were going to be increased.
New Fed Chair Kevin Warsh has vowed to move the Fed away from using so-called forward guidance, instead adopting an approach that is more attuned to changing economic data.
He nonetheless said that he thinks that Warsh was “re-affirming” the Fed's commitment to hitting the Fed's 2% inflation target, rather than recommitting.

The US ISM services PMI was in line with expectations in June, slipping to 54.0, from 54.5 in May.
The trade balance, due out today, is likely to have widened significantly in May, to -$78.4bn, from -$55.9bn in April.
Exports likely declined across most product categories, while imports are expected to have increased.
The NY Fed 1 yr inflation expectations for June are also on the cards today.

Locally, the SARB's gross and net reserves for June are scheduled for release today.
Net reserves are expected to have slipped to $71.1bn in June, from $73.47bn in May.
Gross reserves were $76.58bn in May.

Brent crude oil is currently at $72.60/bbl; ($71.99/bbl*).
Gold is at $4125/oz ($4155/oz*).
SA CDS 122bps*, Brazil 124bps* and Turkey 219bps*.
Yields: US 10yr at 4.47%*, German bund at 2.94%*, SA 10-year generic at 8.33%*, SA's R2035 at 8.16%*.

* Denotes yesterday's close.

Key events and data:

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