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In the loop 24 May 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R15.82/$, after closing stronger yesterday (R15.74/$*).
  • EM currencies were mixed yesterday; the RUB (+6.2%), HUF (+1.7%) and PLN (+1.5%) were the biggest gainers; the ARS (-0.4%), IDR (-0.2%) and COP (-0.1%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.
  • Russia-Ukraine war: Ukrainian President Zelensky has called for a global plan to help rebuild Ukraine after the war.
  • World Economic Forum: the IMF has warned that the global economy faces its “biggest test since the second world war”.
  • The impact of supply chain disruptions and higher interest rates have now been exacerbated by this war.
  • Atlanta Fed President Raphael Bostic “favours raising the Fed funds rate by 50 bps” at the next few meetings.
  • He is “open to adjusting to 75 bps” if inflation fails to cool as expected.
  • Bostic expects US economic growth to be above trend in 2022
  • He noted that US growth may well overshoot 2%; he has incorporated “aggressive” policy moves into his forecast.
  • ECB President Christine Lagarde’s expectation of two 25 bps rate hikes contrasts with some hawkish policymakers wanting to perhaps move faster.
  • This on record-high inflation, and concerns about euro weakness.
  • Lagarde’s plan to exit sub-zero monetary policy by end Q3:22 was revealed yesterday; it does not factor in a 50 bps move.
  • The Fed and other central banks are already phasing out accommodative monetary policy as inflation increases globally.
  • BOE Governor Andrew Bailey has commented that the cost-of-living crisis in the UK is holding back the economic recovery
  • BOE policymakers will factor this in when assessing how much further to raise rates. 
  • Bailey noted that the bank would hike again, if necessary to bring inflation down in the medium term.
  • SA has the 30th highest Covid caseload, at 3.931 million; 1,662 new cases were reported yesterday.
  • 18.053 million people, or 45.36% of the SA adult population, have been fully vaccinated.
  • The SARB’s leading indicator for March is due today; the index slipped to 127.2 pts in February, from 127.3 pts in January.
  • Brent crude oil is down this morning, and up by 44.8% year-to-date.
  • The gold price is up this morning, and up by 1.5% year-to-date.
  • Brent crude oil is currently at $112.64/bbl; ($113.43/bbl*).
  • Gold is at $1856/oz ($1850/oz*).
  • SA CDS 265bps*, Brazil 243bps* and Turkey 705bps*.
  • Yields: US 10yr at 2.84%*, German bund at 1.017%* and SA 10-year generic at 10.17%*, SA’s R186 at 8.17%*.

* Denotes yesterday’s close.

Key events and data: 

  • 09h00: SA leading indicator (March)
  • 10h00: Eurozone S&P Global manufacturing, services and composite PMI (May)
  • 10h30: UK S&P Global manufacturing, services and composite PMI (May)
  • 15h45: US S&P Global manufacturing, services and composite PMI (May)
  • 16h00: US new homes sales (April)

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