In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is unchanged this morning, at R17.79/$, after closing stronger yesterday (R17.79/$*).
- EM currencies were mixed yesterday; the COP (+1.0%), MXN (+0.7%) and RUB (+0.7%) were the biggest gainers; the BRL (-2.2%), CLP (-0.8%) and THB (-0.5%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei is down, while the Hang Seng and Shanghai Composite are up.
- Central bank watch: the US FOMC meeting minutes of the 17-18 June meeting were released yesterday.
- The Fed minutes showed that policymakers were divided over the outlook for interest rates.
- This division is being driven to a large extent by differing expectations on how tariffs might affect inflation.
- Most policymakers see that “some reduction” in the Fed funds rate would likely be appropriate this year.
- Ten of 19 officials expect at least two rate cuts by the end of this year.
- Seven policymakers, however, projected no cuts at all in 2025, while two projected one cut.
- It was noted that a stable economy provides room for the Fed to be patient on rate adjustments.
- President Trump yesterday issued tariff letters to seven more US trading partners, setting tariff rates ranging from 20-30%.
- Some of these smaller US trading partners include the Philippines, Algeria, Iraq, Sri Lanka, Libya, Brunei and Moldova.
- Trump also announced a 50% tariff on imports from Brazil, from an initial 10%.
- The EU, the biggest bilateral trading partner of the US, said that it is on course to reach a trade agreement with the US in the coming days.
- Trump noted that he would "probably" tell the EU within two days what rate it could expect for its exports to the US.
- He added that the bloc had become much more cooperative.
- He also noted that the US would begin levying a 50% tariff on copper imports, from 1 August.
- The BOEs Financial Stability Report, released yesterday, highlighted that geopolitical turmoil, a trade war and a deterioration in government bond markets have increased the uncertainty over the outlook for global growth.
- The report noted that the outlook for UK growth over the coming year is “a little weaker”, amid increased uncertainty, than it was in the November report.
- However, the ability of UK households, to continue repaying their mortgages and other debts, is largely expected to “remain resilient”.
- Sentiment across the UK property market remains subdued.
- The UK’s Royal Institute of Chartered Surveyors (RICS) house price balance came in at -7% in June, unchanged from May.
- Ongoing uncertainty around global trade policies will continue to weigh on sentiment.
- Locally, manufacturing production for May is due out today; production is expected to have declined by 1.4% y/y in May, after having fallen by 6.3% y/y in April.
- On a m/m basis, manufacturing production is likely to have increased by 0.3% in May, following a 1.9% increase in April.
- Brent crude is up this morning, and down by 5.8% year-to-date.
- The gold price is down this morning, and up by 26.6% year-to-date.
- Brent crude oil is currently at $70.28/bbl; ($70.19/bbl*).
- Gold is at $3322/oz ($3313/oz*).
- SA CDS 188bps*, Brazil 142bps* and Turkey 285bps*.
- Yields: US 10yr at 4.33%*, German bund at 2.67%*, SA 10-year generic at 9.91%*, SA’s R2035 at 9.84%*.
* Denotes yesterday’s close.
Key events and data:
- 13h00: SA manufacturing production (May)
- 14h30: US initial jobless claims (5 July)
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