In the loop

What you should know this morning:

• The rand is unchanged this morning, at R16.54/$, after closing unchanged yesterday (R16.54/$*).
• EM currencies were mixed yesterday; the MYR (+0.1%) and INR (+0.1%) were the biggest gainers; the THB (-0.9%), CLP (-0.6%) and PEN (-0.6%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are up, while the Hang Seng is down.

• The US dollar gained ground yesterday as expectations of a further interest rate increase strengthened. 
• Fed policymakers have struck a more hawkish tone amid continued economic resilience, prompting investors to raise their expectations for additional policy tightening.
• Increased volatility in equity markets also boosted demand for the dollar as investors sought safer assets. 
• Meanwhile, tensions between the US and Iran over key aspects of their framework agreement further supported safe-haven flows into the dollar.
• The gold price declined as rising expectations of Fed rate hikes reduced the appeal of gold.

• Iran war: a central focus yesterday was the flows through the Strait of Hormuz and regional security arrangements.
• Negotiations remained strained by unresolved disagreements over nuclear inspections, sanctions relief, and control of shipping routes.
• Iran engaged Gulf states such as Oman, Qatar and Saudi Arabia on the future management of the Strait of Hormuz.
• Discussions continued on implementing ceasefire mechanisms in Lebanon.

• BOE policymaker Swati Dhingra noted yesterday that tighter monetary policy appears to have a particularly negative impact on investment and innovation in green technologies. 
• She argued that evidence showing higher interest rates can restrain green investment and strengthens the case for closer coordination between monetary and fiscal policy. 
• Dhingra emphasised that central banks are not responsible for driving the green transition itself, but rather for maintaining price stability in an economy increasingly shaped by climate change and decarbonisation. 
• She added that policymakers should not stray from their price stability mandates in response to climate-related or transition-driven inflation. 
• Instead, she stressed that climate change, energy security, and the transition to a greener economy have become increasingly important factors influencing price stability.

• The US Fed's preferred inflation gauge for May, the core PCE deflator, due today, is expected to have increased by 0.3% m/m, after having increased by 0.2% m/m in April.
• Personal income is expected to have increased by 0.4% m/m in May, after having stagnated in April.
• Personal spending is also expected to have increased, by 0.6% in May, following a 0.5% m/m increase in April.
• Today will also see the release of the third estimate of Q1:26 GDP, with real growth likely coming in at around 1.6% q/q, which would be unchanged from the previous estimate. 

• Locally, the May PPI is scheduled for release and is expected at 6.7% y/y, after having increased by 4.8% y/y in April.
• On a m/m basis, PPI is likely to 1.6% m/m in May, following a 3.0% m/m increase in April.

• Brent crude oil has erased its war-related gains as oil flows through the Strait of Hormuz increased following progress in US-Iran peace negotiations.
• Brent crude is down this morning, and up by 19.4% year-to-date.
• The gold price is down this morning, and down by 7.8% year-to-date.

• Brent crude oil is currently at $72.68/bbl; ($73.74/bbl*).
• Gold is at $3982/oz ($3999/oz*).
• SA CDS 127bps*, Brazil 127bps* and Turkey 224bps*.
• Yields: US 10yr at 4.39%*, German bund at 2.86%*, SA 10-year generic at 8.46%*, SA's R2035 at 8.27%*.

* Denotes yesterday's close. 

Key events and data:

• 08h00: Japan machine tool orders (May – final)
• 10h00: Eurozone ECB publishes Economic Bulletin
• 11h30: SA PPI (May)
• 14h30: US personal income and spending, core PCEC deflator (May), GDP (Q1:26), initial jobless claims (20 June), durable goods orders (May)

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