In the loop

What you should know this morning:

• The rand is stronger this morning, at R19.18/$, after closing stronger yesterday (R19.20/$*).
• EM currencies were mixed yesterday; the COP (+1.2%), KRW (+0.4%) and ZAR (+0.2%) were the biggest gainers; the CLP (-0.8%), THB (-0.7%) and HUF (-0.7%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• US House Speaker Kevin McCarthy noted yesterday that despite debt ceiling negotiations, there's still no deal to avert a US default. 
• McCarthy pleaded with Republicans to support the party’s demands for spending cuts to avert a US default.
• The x-date is fast approaching and the uncertainty continues to weigh on markets.

• The US FOMC minutes of the 2-3 May meeting are scheduled for release today.
• They may shed light on whether the committee agrees that 5.25% constitutes the peak or that rates are sufficiently restrictive.

• UK inflation for April, scheduled for release today, is finally expected at single-digits. 
• CPI is expected at 8.2% y/y in April, from an increase of 10.1% y/y in March.
• The moderation is likely to be largely driven by a base effect as a nearly 50% rise in household energy bills last year falls out of the annual comparison.
• CPI should continue moderating due to base effects and declines in wholesale energy prices. 

• The Reserve Bank of New Zealand (RBNZ) has hiked its key rate by 25 bps, to 5.5%, in line with expectations. 
• The RBNZ signalled that the tightening cycle is done as no further hikes would be needed to tame inflation.
• Now, the central bank’s forecasts reflect rate cuts beginning in Q3:24.
• The bank’s forecasts also show a shallower economic slowdown, with a mild recession projected for the second and third quarters of this year.

• Locally, Moody’s rating agency retained SA’s rating at Ba2 with a stable outlook yesterday.
• Moody’s noted that the stable outlook comes as the agency expects government’s debt burden to stabilise, or decline slightly, over the medium term.
• However, the agency also noted that risks related to social demands and SOEs remain.

• The April CPI, due out today, is expected at 7.0% y/y, from 7.1% y/y in March.
• On a m/m basis, CPI is expected to have increased by 0.5% in April, after having increased by 1.0% in March.
• Core CPI was likely 5.4% y/y in April, from 5.2% y/y in March.
• The data comes as the SARB is due to make its decision on interest rates tomorrow; it is largely expected to hike the repo rate by 50 bps, to 8.25%.

• Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 5 loadshedding will be implemented then.

• Brent crude oil is up this morning, and down by 9.6% year-to-date.
• The gold price is up this morning, and up by 8.4% year-to-date.

• Brent crude oil is currently at $77.70/bbl; ($76.84/bbl*).
• Gold is at $1978/oz ($1973/oz*).
• SA CDS 320bps*, Brazil 214bps* and Turkey 697bps*.
• Yields: US 10yr at 3.69%*, German bund at 2.46%* and SA 10-year generic at 12.07%*, SA’s R2030 at 11.22%*.

* Denotes yesterday’s close. 

 Key events and data: 

• 08h00: Japan machine tool orders (April – final)
• 08h00: UK CPI, PPI, RPI (April)
• 10h00: SA CPI (April)
• 10h30: UK house price index (April)
• 13h00: US MBA mortgage applications (19 May)
• 20h00: US FOMC meeting minutes (3 May)

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