Closing the loop

Market highlights:

• The rand is weaker at R19.72/$ (R19.71/$*) today; it ranged between R19.67/$ and R19.85/$.
• The currency is above its 50-day, 100-day and 200-day moving averages (R18.57/$, R18.21/$ and R17.86/$).
• EM currencies are mixed today; the PHP (+0.3%) was the biggest gainer; the TRY (-1.5%), BRL (-0.9%) and CLP (-0.8%) were the biggest losers. 

• The rand weakened for a third consecutive day and is hovering near record highs.
• The currency has been pressured by a strengthening USD and dampened local investor sentiment.  
• Concerns about SA’s relationship with Russia amidst the war and the ongoing power crisis continues to keep currency gains at bay.
• Eskom: Stage 6 loadshedding is currently in place until 5 am; Stage 4 loadshedding will be implemented then.

• The SA trade surplus narrowed to R3.5bn in April from a downwardly revised surplus of R6.3bn in March.     
• Exports decreased by 14.5% m/m while imports declined by 13.5% m/m in April.  
• Exports of precious metals and stones, machinery and electronics, base metals, vegetable products and mineral products were down in April.
• Imports of mineral products, wood, pulp and paper, vehicles and transport equipment and chemical products decreased in April; imports of machinery and electronics were up.
• The cumulative trade deficit of R3.5bn in April compares with a cumulative trade surplus of R78bn in April 2022.

• The BER manufacturing PMI for May, due out tomorrow, likely slipped to 49.2 in May, from 49.8 in April.
• The May Naamsa vehicle sales (also scheduled for release tomorrow) likely declined by 1.6% y/y, after having fallen by 0.2% y/y in April.
• The electricity production and consumption data for April are also on the cards tomorrow.

• US JOLTS job openings increased (and exceeded expectations) to 10.103 million (its highest in 3 months) in April from an upwardly revised 9.745 million in March.
• The data suggests that demand for workers remains strong despite challenging economic conditions.
• The US ADP employment report is in the spotlight tomorrow; private payrolls are expected to have increased by 170k in May after having increased by 296k in April.
• Cleveland Fed President Loretta Mester commented yesterday that she sees “no compelling reason” for the Fed to pause rates at the June FOMC meeting.
• Mester noted that the only reason for potentially pausing at a time when it is clear that further rate hikes are necessary would be extreme market volatility or some other shock.
• Fed policymakers have hiked the Fed funds rate above 5% earlier this month and signalled the readiness for a pause.
• However, economic data since then have pushed up expectations for another rate increase at the 13-14 FOMC meeting.

• The oil price is down by 1.3% today, and down by 15.5% in the year-to-date.
• The gold price is up by 0.3% today, and up by 7.9% in the year-to-date.

• Brent crude oil is at $72.58/bbl ($73.54/bbl*).
• Gold price is at $1967/oz ($1959/oz*). 
• SA CDS is at 318bps (314bps*), Brazil 211bps (207bps*), Turkey 609bps (619bps*).
• Yields: US 10yr 3.67% (3.68%*), German bund at 2.29% (2.34%*) and SA 10-year generic at 12.15% (12.12%*), SA’s R2030 is at 11.32% (11.29%*).
• The JSE ALSI is down by 1.1% today (-0.9%*).

* Denotes yesterday’s close. 

Key events and data:

• 02h30: Japan Jibun Bank manufacturing PMI (May – final)
• 03h45: China Caixin manufacturing, non-manufacturing and composite PMI (May)
• 10h00: Eurozone HCOB manufacturing PMI (May – final)
• 10h30: UK net consumer credit (April), S&P Global/CIPS manufacturing PMI (May – final)
• 11h00: SA BER manufacturing PMI (May)
• 11h00: Eurozone unemployment rate (April), CPI (May)
• 13h00: SA electricity production and consumption (April)
• 14h15: US ADP employment report (May)
• 14h30: US initial jobless claims (27 May)
• 16h00: US ISM manufacturing (May)
• SA Naamsa vehicle sales (May)

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