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 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:

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