In the loop 31 May 2023

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is weaker this morning, at R19.77/$, after closing weaker yesterday (R19.71/$*).
EM currencies were mixed yesterday; the COP (+0.9%), HUF (+0.4%) and CLP (+0.1%) were the biggest gainers; the TRY (-1.5%), MXN (-0.6%) and RUB (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

The US debt-limit bill: the House Rules Committee has agreed in a 7-6 vote to advance this Bill to the full House today.
House approval is critical in getting Senate approval by Monday.

The US labour market data is in the spotlight today and is likely to show further signs of cooling.
The JOLTS job openings for April are likely to have fallen in April.

Richmond Fed President Thomas Barkin noted that he is looking for signs that demand is cooling to be convinced that US Inflation will moderate towards the bank’s 2% target.
Barkin did not comment on what move he is likely to favour at the upcoming FOMC meeting on 13-14 June.
However, he cited the non-farm payrolls report, due out on Friday, as an important input into the bank’s decision.
Former Treasury Secretary Lawrence Summers sees US interest rates rising further in the short term.
Summers noted that the Fed may still need to raise rates by 50 bps, or more.
The US Beige Book is scheduled for release later today.

Manufacturing activity in China weakened more than expected in May.
The official manufacturing PMI fell to 48.8 in May, the lowest since December 2022, from 49.2 in April.
The non-manufacturing (services) PMI slipped to 54.5 in May, from 56.4 in April.
Today’s data confirms that the Chinese economy cooled in the Q2:23 following strong consumer activity earlier this year.
Calls are now rising for more central bank stimulus to spur economic growth.

Locally, April trade balance data is scheduled for release today; the trade surplus is likely to have compressed to R0.5bn, from a surplus of R6.9bn in March.
Eskom: Stage 4 loadshedding is currently in place until 4pm; Stage 6 loadshedding will follow at 4pm.
Electricity Minister Dr Kgosientsho Ramakgopa is in talks to buy more than 1,000 MW of electricity from Mozambique to ease SA’s power crisis.
He noted that “in the short term, Mozambique can provide 80 megawatts to South Africa and a further 1,000 megawatts upon agreement of stipulated terms”.

Brent crude oil is currently at $73.35/bbl; ($73.54/bbl*).
Gold is at $1958/oz ($1959/oz*).
SA CDS 314bps*, Brazil 207bps* and Turkey 619bps*.
Yields: US 10yr at 3.68%*, German bund at 2.34%* and SA 10-year generic at 12.12%*, SA’s R2030 at 11.29%*.

* Denotes yesterday’s close.

Key events and data:

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