In the loop 06 June 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.90/$, after closing weaker yesterday (R18.96/$*).
EM currencies were mixed yesterday; the MXN (+1.9%), TRY (+1.0%) and HUF (+0.5%) were the biggest gainers; the ZAR (-1.4%), IDR (-0.4%) and THB (-0.3%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are up, while the Shanghai Composite is down.

The US ISM services PMI overshot expectations in May, increasing to 53.8, from 49.4 in April.
New orders and business activity were the main drivers of the increase in May.
The employment sub-component improved modestly but remained in contraction in May.
The increase in the ISM services PMI was in line with the uptick in the S&P global services PMI, which increased to 54.8 in May, from 51.3 in April.
The US trade balance for April, due out today, is likely to have widened further, to a deficit of $76.5bn, from a deficit of $69.4bn in March.

The ECB policy meeting is in the spotlight today as the bank decides on rates; the central bank is largely expected to cut its benchmark interest rate by 25 bps today.
Several ECB policymakers have recently expressed the view that the central bank should not be in “autopilot” mode following the first rate cut.
Rather, the central bank should assess all data and decide on a meeting-by-meeting basis.
Investors will likely keep an eye on President Christine Lagarde’s press conference after the interest rate announcement for clues on the bank’s next steps.
The ECB is likely to keep its inflation forecasts unchanged from March; however, the GDP forecasts may be upwardly revised.

Eurozone retail sales for April are also due out today; sales are likely to have declined by 0.3% m/m in April, after having increased by 0.8% m/m in March.
On a y/y basis, sales are expected to have increased by 0.2% in April, following a 0.7% increase in March.
The UK Decision Maker Panel (DMP) survey for one-year ahead inflation expectations are expected to come in at 2.8% in May, from 2.9% in April.
The three-month inflation expectations are likely to come in at 3.9% in May, from 4.0% in April.

Locally, the current account for Q1:24 is scheduled for release today; the deficit is likely to have narrowed to 1.6% of GDP in Q1:24, from a deficit of 2.3% of GDP in Q4:23.
Electricity production and consumption releases for April are due out today.

Brent crude oil is currently at $78.79/bbl; ($78.41/bbl*).
Gold is at $2368/oz ($2352/oz*).
SA CDS 241bps*, Brazil 144bps* and Turkey 266bps*.
Yields: US 10yr at 4.27%*, German bund at 2.51%*, SA 10-year generic at 12.13%*, SA’s R2030 at 10.69%*.

* Denotes yesterday’s close.

Key events and data:

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