In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is marginally stronger this morning, at R16.59/$, after closing stronger yesterday (R16.60/$*).
- EM currencies were mixed yesterday; the THB (+1.1%), RUB (+0.8%) and TRY (+0.4%) were the biggest gainers; the COP (-0.8%), HUF (-0.3%) and BRL (-0.2%) were the biggest losers.
- Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
- China’s CPI came in at 2.7% y/y in July, the highest in two years, from 2.5% y/y in June, due to higher pork prices.
- Core CPI, however, which excludes volatile food and energy, was subdued in July.
- This implies very little demand pressure in China’s economy to warrant concern from policymakers.
- Indeed, CPI has been relatively contained this year as China’s Covid Zero control policy and sporadic outbreaks have curbed consumer and business spending.
- PPI moderated more than expected in July to 4.2% y/y, from 6.1% y/y in June.
- Japan’s PPI slowed to 8.6% y/y in July, from 9.4% y/y in June, due to government subsidies constraining energy prices.
- Still, prices are at a much higher level than the increases being seen by consumers.
- Inflation, however, is still more muted than other advanced economies.
- The much-awaited US CPI data for July is scheduled for release later today and is expected to come in at 8.7% y/y from 9.1% y/y in June.
- On a m/m basis, CPI is expected to have increased by 0.2% in July, from an increase of 1.3% in June.
- Core CPI is expected to come in at 6.1% y/y in July, from 5.9% y/y in June.
- Despite the moderation expected, CPI is still expected to remain at 40-year highs.
- This, together with the strong July payrolls data, may see the Fed hike rates by a further 75 bps next month.
- UK consumer confidence increased slightly in July, after falling for seven consecutive months, according to a survey conducted by YouGov/Cebr.
- The uptick reflects the introduction of support payments for low-income households.
- The improvement, albeit slight, comes just days after the BOE indicated that the UK economy is headed for five quarters of recession.
- Locally, the SACCI business confidence index for July is due for release today.
- Brent crude oil is down this morning, and up by 23.3% year-to-date.
- The gold price is down this morning, and down by 2.2% year-to-date.
- Brent crude oil is currently at $95.85/bbl; ($96.31/bbl*).
- Gold is at $1789/oz ($1795/oz*).
- SA CDS 258bps*, Brazil 265bps* and Turkey 706bps*.
- Yields: US 10yr at 2.77%*, German bund at 0.92%* and SA 10-year generic at 10.71%**, SA’s R186 at 8.85%**.
* Denotes yesterday’s close.
** Denotes Monday’s close.
Key events and data:
- 11h30: SA SACCI business confidence (July)
- 13h00: US MBA mortgage applications (5 August)
- 14h30: US CPI (July)
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