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In the loop 23 May 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R15.81/$, after closing stronger on Friday (R15.84/$*).
  • EM currencies were mixed on Friday; the RUB (+2.1%), BRL (+1.0%) and THB (+0.9%) were the biggest gainers; the BGN (-0.3%), RON (-0.3%) and TRY (-0.2%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.
  • ECB President Christine Lagarde has once again signalled the first rate increase as “likely to be soon”.
  • She added that a hike may come "weeks" after net bond-buying has ended early next quarter. 
  • However, she downplayed the notion of a 50 bps increase amid concerns about regional economic growth.
  • The US PCE deflator, the Fed's preferred measure of inflation, likely slowed to 6.2% y/y in April, from 6.6% y/y in March.
  • The core measure likely eased, too, to 4.9% y/y in April, from 5.2% y/y in March.
  • Personal income and spending figures will likely show that US consumers remain resilient despite elevated price pressures. 
  • US new and pending home sales, due Tuesday and Thursday, likely fell in April. 
  • The US FOMC April meeting minutes are due this week. 
  • The World Economic Forum (WEF) takes place in Davos this week. 
  • Christine Lagarde will speak mid-week; there may be multiple appearances from ECB officials and BOE officials.
  • Indonesia is expected to hold rates steady tomorrow.
  • RBNZ is expected to hike rates by 50 bps on Wednesday. 
  • South Korea’s central bank is likely to raise by 25 bps on Thursday. 
  • Turkey and Nigeria's central banks are expected to hold steady on their interest rates this week.
  • SA has the 30th highest Covid caseload, at 3.929 million; 3,220 new cases were reported yesterday.
  • 18.041 million people, or 45.33% of the SA adult population, have been fully vaccinated.
  • S&P Global Ratings has unexpectedly revised its outlook on SA’s sovereign credit ratings to positive, from stable.
  • It signalled that the next move could be a ratings upgrade.
  • It cited “expectation of favourable terms of trade, a path toward contained fiscal expenditure, and the implementation of some structural reforms” as drivers.
  • The agency added that all that may “lead to a continued easing of fiscal and external pressures”. 
  • Stage 2 loadshedding is likely to continue in the evenings this week.
  • The SARB’s leading indicator for March is due this week; the indexy slipped to 127.2 pts in February, from 127.3 pts in January.
  • The April PPI likely increased to 12% y/y, from 11.9% y/y in March; PPI likely moderated to 0.8% m/m in April, from 2.5% m/m in March.
  • Brent crude oil is up this morning, and up by 45.9% year-to-date.
  • The gold price is up this morning, and up by 1.4% year-to-date.
  • Brent crude oil is currently at $113.43/bbl; ($112.55/bbl*).
  • Gold is at $1854/oz ($1846/oz*).
  • SA CDS 273bps*, Brazil 246bps* and Turkey 717bps*.
  • Yields: US 10yr at 2.81%*, German bund at 0.944%* and SA 10-year generic at 10.19%*, SA’s R186 at 8.19%*.

* Denotes Friday’s close.

Key events and data: 

  • No data releases

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