In the loop

What you should know this morning:

• The rand is stronger this morning, at R16.33/$, after closing stronger yesterday (R16.34/$*).
• EM currencies were mixed yesterday; the COP (+1.0%), CZK (+0.2%) and PEN (+0.2%) were the biggest gainers; the ARS (-0.4%), THB (-0.3%) and BRL (-0.1%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

• Iran war: President Trump has stated that the US remained in contact with Iranian officials and continued to press Tehran to return to the negotiating table.
• He warned that military operations could be intensified if no agreement was reached.
• Iran signalled that its immediate focus was on defence rather than talks, with Iranian officials arguing that pressure tactics and continued military action were undermining prospects for a settlement.

• Central bank watch: Fed Chairman Kevin Warsh yesterday said that President Trump has not attempted to interfere with the Fed's policy decisions. 
• Warsh reaffirmed that he would defend the Fed's independence and added that he would “keep his head down and do the job” if any attempt were made to influence the central bank. 
• On inflation, Warsh argued that the AI boom is unlikely to generate persistent price pressures. 
• The Swiss National Bank (SNB) is expected to publish the minutes of its June policy meeting today.

• ECB Governing Council member Emmanuel Moulin warned that the ECB should remain prepared for renewed volatility in inflation as tensions in the Middle East continue to create uncertainty. 
• He said renewed instability in the Strait of Hormuz and discussions around imposing transit taxes would add to inflation risks.
• However, he noted that the impact on prices will depend on whether the latest crisis proves prolonged and whether the US and Iran can reach a lasting agreement. 
• Moulin added that policymakers must be prepared for all scenarios.

• The UK's GDP release for May is due out today. 
• GDP is likely to have flatlined in May, after having declined by 0.1% m/m in April. 
• Retail sales data suggests that consumer spending picked up in May, supported by good weather and promotions, and contributed positively to GDP in May.
• The Eurozone trade balance for May is also scheduled for release today.

• Fed Governor Lisa Cook said monetary policy remains mildly restrictive but warned that inflation risks are skewed to the upside.
• She argued that AI-related investment, tariffs, Middle East tensions and supply disruptions could keep inflation above target for longer.
• Cook added that she would support further policy action if disinflation stalled.
• NY Fed President John Williams said that interest rates are well positioned to return inflation to the 2% target.
• While inflation remains too high, he believes that it has likely peaked and should gradually ease, reaching about 3.25% by year-end, then falling back to target by 2028.
• He expects the inflationary effects of AI to fade over time.

• The US Fed's Beige Book indicated that the US economy continued to expand at a slight to moderate pace between late May and June.
• Consumer spending edged higher overall, although elevated fuel prices weighed on discretionary purchases and prompted some households to trade down to cheaper alternatives.
• Tourism activity strengthened, partly supported by World Cup-related travel, while manufacturing, data centre construction, machinery production and defence-related industries were among the stronger-performing sectors.
• Labour market conditions remained generally stable.

• The NAHB housing market index for July, scheduled for release today, is expected to have remained steady, at 35.
• The NAHB noted that sentiment is likely to remain soft “until barriers are eased and conditions improve for home building”.
• Business inventories likely grew by 0.3% m/m in May, after having increased by 0.5% m/m in April.

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

• Brent crude is down this morning, and up by 39.0% year-to-date.
• The gold price is down this morning, and down by 6.8% year-to-date.

• Brent crude oil is currently at $84.55/bbl; ($84.94/bbl*).
• Gold is at $4028/oz ($4060/oz*).
• SA CDS 124bps*, Brazil 122bps* and Turkey 229bps*.
• Yields: US 10yr at 4.54%*, German bund at 3.12%*, SA 10-year generic at 8.53%*, SA's R2035 at 8.36%*.

* Denotes yesterday's close. 

Key events and data:

• 08h00: UK monthly GDP (May), industrial production (May), manufacturing production (May), trade balance (May)
• 11h00: Eurozone trade balance (May)
• 14h30: US advance retail sales (June), initial jobless claims (11 July)
• 16h00: US NAHB housing market index (July), business inventories (May)

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