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In the loop 19 May 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R19.32/$, after closing weaker yesterday (R19.36/$*).
  • EM currencies were mixed yesterday; the PHP (+0.5%), KRW (+0.3%) and TWD (+0.2%) were the biggest gainers; the HUF (-2.2%), PLN (-1.4%) and MXN (-1.1%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is up while the Hang Seng and Shanghai Composite are down.
  • US House Speaker Kevin McCarthy commented that he expects the House to consider a debt ceiling deal next week.
  • However, an "agreement in principle" is likely to be reached this weekend.
  • The two sides have been negotiating the scope of spending cuts. 
  • The G7 summit kicks off today in Japan.
  • G7 leaders have indicated that they will impose additional sanctions on Russia and add restrictions on goods it uses in the war. 
  • They have also reinforced their commitment to keeping Moscow's sovereign assets immobilized until the war is over.
  • The G7 leaders are also looking to further reduce reliance on Russian energy.
  • Japan’s CPI overshot expectations in April, at 3.5% y/y, after having increased by 3.2% y/y in March. 
  • Core CPI came in at 3.4% y/y in April, following a 3.1% y/y increase in March.
  • Today’s data supports the view that the central bank will have to upwardly revise its CPI forecasts.
  • This may fuel speculation of policy adjustment in the months ahead, even as early as July this year. 
  • BOJ Governor Kazuo Ueda has previously indicated that once the inflation target comes into sight, the central bank would adjust existing policy, including the yield curve control program. 
  • Locally, S&P ratings agency is scheduled to publish its SA sovereign ratings review today.
  • Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 5 will be implemented then until 5am tomorrow.
  • Brent crude oil is up this morning, and down by 10.9% year-to-date.
  • The gold price is up this morning, and up by 7.6% year-to-date.
  • Brent crude oil is currently at $76.52/bbl; ($75.86/bbl*).
  • Gold is at $1962/oz ($1955/oz*).
  • SA CDS 326bps*, Brazil 218bps* and Turkey 681bps*.
  • Yields: US 10yr at 3.63%*, German bund at 2.44%* and SA 10-year generic at 11.94%*, SA’s R2030 at 11.13%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • S&P SA sovereign ratings review

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