In the loop 01 July 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.70/$, after closing stronger yesterday (R17.72/$*).
EM currencies were mixed yesterday; the CLP (+1.1%), BRL (+1.0%) and KRW (+0.6%) were the biggest gainers; the TWD (-1.5%), ARS (-1.3%) and INR (-0.3%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Hang Seng are down, while the Shanghai Composite is up.

The ECB unveiled the bank’s updated strategy yesterday.
ECB President Christine Lagarde noted that tweaks to the strategy would allow policymakers to deliver more nuanced communication in an increasingly unpredictable and uncertain world.
Lagarde added that the bank “commits to ensuring that our policy decisions account not only for the most likely path of inflation and the economy, but also for the surrounding risks and uncertainty”.
The strategy has been revised in "response to the post-pandemic inflation spike that had caught the ECB off guard".
It would also involve weighing "two-sided" risks to the inflation outlook.

The UK Nationwide house price index for June is scheduled for release today; prices are expected to have increased by 3.1% y/y, down from 3.5% y/y in May.
This is expected as price gains begin to normalise following a period of strength.
Eurozone CPI for June is also due out and is expected to have increased to the ECB's 2% target.
On a m/m basis, CPI is expected to have increased by 0.3% in May, after having flatlined in April.
Core CPI is likely to have remained unchanged, at 2.3% y/y, in May.
The data is likely to bolster the case for the ECB to reduce interest rates again this year.

Atlanta Fed President Raphael Bostic has noted that tariffs might cause an incremental impact on prices, instead of a once-off bump.
He added that this could result in more persistent upward pressure on inflation.
Fed policymakers are divided over how tariffs are likely to affect inflation.
Several policymakers are supportive of the Fed lowering interest rates further this year, while others expect no rate cuts.
Those expecting no further interest rate cuts are likely more concerned that tariffs could lead to more persistent price pressures.

The US JOLTS job openings for May are likely to have slipped to 7.30m, from 7.391m in April.
The layoff and discharge rate might have remained unchanged, at 1.1%, in May.
The headline ISM Manufacturing PMI, also due out, is expected to have improved slightly in June, to 48.8, from 48.5 in May.

The BER manufacturing PMI for June is due for release; the index slipped to 42.1 in May, from 44.7 in April.
The June Naamsa vehicle sales are also due out; vehicle sales increased by 22.0% y/y in May.

Brent crude oil is currently at $66.46/bbl; ($67.61/bbl*).
Gold is at $3329/oz ($3303/oz*).
SA CDS 188bps*, Brazil 149bps* and Turkey 291bps*.
Yields: US 10yr at 4.22%*, German bund at 2.60%*, SA 10-year generic at 10.01%*, SA’s R2035 at 9.94%*.

* Denotes yesterday’s close.

Key events and data:

08h00: UK Nationwide house price index (June)
10h00: Eurozone ECB 1 yr and 3 yr inflation expectations (May), HCOB manufacturing PMI (June – final)
10h30: US S&P Global manufacturing PMI (June – final)
11h00: Eurozone CPI (June)
11h00: SA BER manufacturing PMI (June)
15h45: SA S&P Global manufacturing PMI (June – final)
16h00: US ISM manufacturing, JOLTS job openings (May)
SA Naamsa vehicle sales (June)

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