In the loop

What you should know this morning:

• The rand is weaker this morning, at R16.25/$, after closing stronger yesterday (R16.18/$*).
• EM currencies were mixed yesterday; the MYR (+0.6%), TWD (+0.6%) and THB (+0.5%) were the biggest gainers; the RUB (-1.0%), INR (-0.2%) and PHP (-0.2%) were the biggest losers.
• Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are down.

• Iran war: the 60-day memorandum of understanding between the US and Iran has now expired without a peace agreement or extension.
• President Trump stated that he had no intention of extending the arrangement; he indicated that Washington was not satisfied with the terms Tehran was willing to accept.
• Iran, meanwhile, argued that US violations of earlier commitments had rendered the agreement effectively meaningless.

• ECB Chief Economist Philip Lane yesterday noted that Europe's planned increase in defence spending presents important macroeconomic, fiscal, and financial stability challenges for the region.
• He noted that higher defence expenditure is likely to support economic growth in the short term through positive fiscal multipliers.
• However, the overall impact would depend on how the spending is financed, its composition, and the degree to which it relies on imports.
• Lane emphasised that larger defence budgets could place pressure on public finances by widening fiscal deficits and raising debt levels, particularly in countries that already have elevated debt burdens.
• He argued that governments will need credible medium-term fiscal frameworks and careful budget prioritisation to ensure that greater defence spending does not undermine fiscal sustainability.

• The UK jobs data, due out today, is expected to show that annual regular pay growth in the private sector likely moderated to 2.8% y/y in the three months to June, from 2.9% y/y in the three months to May.
• The unemployment rate is expected to have improved in June, to 4.8%, from 4.9% in May.
• Germany's June ZEW survey expectations index for August is due out today and are expected to have improved to 30 in August, from 26.3 in July.
• The current conditions index is likely to have increased to -69.3 in August, from -77.6 in July.
• The Eurozone ZEW survey expectations index for August is also due out today.

• The US NAHB housing market index barely increased in August, to 35, from 34 in July.
• The index has remained below the 50 neutral level for a 16th consecutive month, marking the longest stretch of weak builder sentiment since 2012.
• Builders have been trying to lure buyers into the market with various incentive schemes.
• However, the relatively low level of the index suggests that the housing sector continues to face headwinds from affordability constraints and elevated financing costs.

• US housing starts for July, out today, likely declined by 5.9% m/m, after June's 19% m/m increase.
• Building permits are likely to have increased in July, to 1,400k, from 1,374k in June.
• Industrial production is expected to have increased by 0.3% m/m in July, after having increased by 0.1% m/m in June.
• Mining and energy activity likely provided a boost to overall production.

• Locally, it's a quiet day as far as data releases are concerned.

• Bent crude is up this morning, and up by 50.5% year-to-date.
• The gold price is down this morning, and up by 1.6% year-to-date.

• Brent crude oil is currently at $91.62/bbl; ($90.87/bbl*).
• Gold is at $4389/oz ($4415/oz*).
• SA CDS 118bps*, Brazil 126bps* and Turkey 219bps*.
• Yields: US 10yr at 4.73%*, German bund at 3.22%*, SA 10-year generic at 8.66%*, SA's R2035 at 8.45%*.

* Denotes yesterday's close. 

Key events and data:

• 08h00: UK average weekly earnings (June), ILO unemployment rate (June)
• 11h00: Germany ZEW survey expectations (August)
• 14h30: US housing starts (July), building permits (July)
• 15h15: US industrial production (July), capacity utilisation (July), manufacturing production (July)

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