In the loop

What you should know this morning:

• The rand is stronger this morning, at R19.75/$, after closing weaker yesterday (R19.79/$*).
• EM currencies were mixed yesterday; the RUB (+0.5%), PEN (+0.1%) and TWD (+0.1%) were the biggest gainers; the ZAR (-2.7%), BRL (-1.6%) and COP (-0.9%) were the biggest losers.
• Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.

• US negotiators seem to be moving closer to a deal that would raise the debt limit and cap federal spending for two years.
• This could see defence outlays rise 3% next year, in line with US President Joe Biden’s budget request.
• House speaker Kevin McCarthy noted that they still have a lot of ground to cover before reaching an agreement on averting an approaching US debt default.

• Boston Fed President Susan Collins indicated yesterday that the Fed may have reached, or be approaching, a point at which it can pause rate increases.
• Collins noted that while inflation is still too high, there are some promising signs of a moderation in prices.
• Collins favours a meeting-by-meeting approach in determining the next interest rate move.
• Several policymakers have expressed that, even if the Fed paused at the June FOMC meeting, further policy tightening later this year might be needed to bring down inflation more meaningfully. 
• Collins did not comment on her views about this option in her remarks.

• April’s US personal consumption and spending data releases for April are due out today. 
• The PCE deflator is expected to have increased by 0.3% m/m in April, from 0.1% m/m in March.

• BOE policymaker Jonathan Haskel signalled his support for the central bank to hike rates further.
• He noted that it is important to “lean against” the risk of inflation becoming embedded in the UK.
• He noted that “as difficult as the economy’s current conditions are, embedded inflation would be worse”. 

• Australian retail sales remained flat in April as the rising cost of living and high interest rates restrain consumer spending.
• Most retail sectors saw a decline in sales, with only department stores and clothing reflecting gains as consumers spent ahead of the winter season.
• Spending on food also remained relatively high amid steep food price inflation but dropped in April on a m/m basis.

• Locally, it’s a quiet day as far as economic data releases are concerned.
• Eskom: Stage 4 loadshedding is currently in place into 4pm; Stage 5 loadshedding will be implemented then.

• Brent crude oil is down this morning, and down by 11.5% year-to-date.
• The gold price is up this morning, and up by 6.9% year-to-date.

• Brent crude oil is currently at $76.00/bbl; ($76.26/bbl*).
• Gold is at $1949/oz ($1943/oz*).
• SA CDS 321bps*, Brazil 213bps* and Turkey 673bps*.
• Yields: US 10yr at 3.81%*, German bund at 2.52%* and SA 10-year generic at 11.99%*, SA’s R2030 at 11.10%*.

* Denotes yesterday’s close. 

 Key events and data: 

• 14h30: US personal income and spending (April), PCE deflator (April), durable goods orders (April), advance goods trade balance (April)
• 16h00: US University of Michigan sentiment, 1 yr and 5-10 yr inflation expectations (May – final)

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