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In the loop 18 May 2022

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is weaker this morning, at R15.93/$, after closing weaker yesterday (R15.92/$*).
  • EM currencies were mixed yesterday; the BRL (+2.5%), HUF (+2.4%) and ZAR (+1.8%) were the biggest gainers; the TRY (-1.9%), RUB (-1.2%) and IDR (-0.3%) were the biggest losers.
  • Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.
  • Inflation data releases for several countries are due out today.
  • Inflation is seen accelerating in the UK and the Eurozone.
  • The UK CPI for April is expected to have increased to 9.1% y/y from 7.0% y/y in March.
  • The increase is likely to have been driven by surging energy costs.
  • Goods inflation likely increased, also adding to the April increase.
  • Eurozone CPI is expected to have increased to 7.5% y/y in April, from 7.4% y/y in March.
  • Russia's Q1:22 due out today likely slowed to 3.7% y/y, from 5.0% y/y in Q4:21, due to war-related sanctions.
  • These sanctions will have manifested even more in Q2:22.
  • Trade plunged, investment stalled, and Russian consumers reeled in spending in Q2:22.
  • US Fed Chair Jerome Powell yesterday stressed the bank’s commitment to taming price pressures.
  • Powell noted that restoring price stability was essential to the smooth functioning of the US economy.
  • He noted that the bank won’t hesitate to hike rates above the neutral rate if needed.
  • SA has the 30th highest Covid caseload, at 3.899 million; 5,096 new cases were reported yesterday.
  • 17.996 million people, or 45.22% of the SA adult population, have been fully vaccinated.
  • SA CPI for April and March retail data are due out today.
  • CPI is expected to have remained unchanged at 5.9% y/y (Bloomberg consensus) in April.
  • Retail sales likely increased in March on a y/y basis.
  • Brent crude oil is up this morning, and up by 44.7% year-to-date.
  • The gold price is down this morning, and down by 1.0% year-to-date.
  • Brent crude oil is currently at $112.58/bbl; ($111.93/bbl*).
  • Gold is at $1810/oz ($1821/oz*).
  • SA CDS 263bps*, Brazil 239bps* and Turkey 704bps*.
  • Yields: US 10yr at 2.98%*, German bund at 1.046%* and SA 10-year generic at 10.40%*, SA’s R186 at 8.38%*.

* Denotes yesterday’s close.

Key events and data: 

  • 08h00: UK CPI (April)
  • 10h00: SA CPI (April)
  • 11h00: Eurozone CPI (April)
  • 13h00: SA retail sales (March)
  • 13h00: US MBA mortgage applications (13 May)
  • 14h30: US housing starts, building permits (April)

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