In the loop

What you should know this morning:

• The rand is stronger this morning, at R17.86/$, after closing stronger yesterday (R17.87/$*).
• EM currencies were mixed yesterday; the MXN (+1.0%), HUF (+0.9%) and BRL (+0.9%) were the biggest gainers; the RUB (-2.0%), TWD (-0.2%) and PEN (-0.1%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

• China’s Caixin manufacturing PMI slipped into contraction in May, to 48.3, from 50.4 in April.
• This slippage came despite the de-escalation in trade tensions with the US.
• This is in contrast to the latest official PMI print which indicated a slight improvement.

• The Eurozone CPI for May is due out today and is expected to have moderated to 2.0% y/y, from 2.2% y/y in April.
• On a m/m basis, CPI is expected to have stagnated in May, after having increased by 0.6% m/m in April.
• Core CPI too is expected to have moderated, to 2.4% y/y in May, from 2.7% y/y in April.
• The data may bolster the case for the ECB to reduce interest rates again this year.

• Chicago Fed President Austan Goolsbee yesterday noted that the “US economy looks good underneath the surface”. 
• Goolsbee added that the Fed would be able to proceed with interest rate cuts were uncertainty around trade policy resolved. 
• Policymakers have maintained a cautious stance towards additional moves in the near term.
• The Fed is due to meet to decide on interest rates on 17-18 June.

• The US ISM manufacturing index slipped marginally to 48.5 in May, from 48.7 in April.
• Seven industries reported contraction in May.
• The ISM’s import measure dropped to a 16-year low in May; the gauge of exports fell to the lowest in five years.
• This is likely to have been attributed to the uneven rollout, and frequent changes, in tariffs over the past month.
• This sector is likely to continue to struggle due to US tariffs and trade policy uncertainty.

• The US JOLTS job openings for April are on the cards today and are likely have slipped to 7.100m, from 7.192m in March.
• The data comes ahead of the non-farm payrolls (NFP) for May, due out on Friday.
• Payrolls are expected to have to have increased by 125k, from an increase of 177k in April.
• The unemployment rate is likely to have remained unchanged, at 4.2%, in May.

• Locally, GDP growth for Q1:25 is in the spotlight and is expected to have contracted, after having increased by 0.6% q/q (sa) in Q4:24.
• On a y/y basis, GDP growth is expected at 0.7% in Q1:25, from 0.9% in Q4:24.
• We remain concerned about the downside risks to our forecast for an improvement in growth to around 1.3% y/y in 2025, from 0.6% y/y in 2024.
• Still, ongoing traction with the implementation of reforms may ease entrenched growth constraints.
• These reforms should also still ultimately underpin a meaningful improvement in trend growth.

• Brent crude is down this morning, and down by 13.2% year-to-date.
• The gold price is down this morning, and up by 27.9% year-to-date.

• Brent crude oil is currently at $64.81/bbl; ($64.63/bbl*).
• Gold is at $3358/oz ($3371/oz*).
• SA CDS 205bps*, Brazil 159bps* and Turkey 319bps*.
• Yields: US 10yr at 4.43%*, German bund at 2.52%*, SA 10-year generic at 10.24%*, SA’s R2035 at 10.19%*.

* Denotes yesterday’s close.

Key events and data: 

• 11h00: Eurozone CPI (May), unemployment rate (April)
• 11h30: SA GDP (Q1:25)
• 16h00: US factory orders (April), durable goods orders (April – final), JOLTS job openings (April)

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