In the loop 05 June 2024

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R18.69/$, after closing weaker yesterday (R18.70/$*).
EM currencies were mixed yesterday; the THB (+0.5%), RUB (+0.5%) and MYR (+0.1%) were the biggest gainers; the COP (-1.8%), TRY (-1.3%) and ZAR (-1.0%) were the biggest losers.
Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.

China’s Caixin services PMI increased to 54.0 in May (the highest in 10 months), from 52.5 in April.
Total new orders increased at the quickest pace in a year on the back of recovering demand.
The increase signals some resilience in the sector and may alleviate concerns over the economy’s outlook after weak official services PMI data.
The Caixin composite PMI also increased in May, to 54.1, from 52.8 in April.

Australia’s Q1:24 GDP came in at 0.1% q/q in Q1:24, from an upwardly revised increase of 0.3% q/q in Q4:23.
On a y/y basis, GDP slowed to its lowest rate since 1992, excluding the pandemic year, at 1.1% in Q1:24, from 1.6% in Q4:23.
Elevated interest rates and cost of living pressures weighed heavily on households and broader economic activity.
The slowdown will likely increase pressure on the Reserve Bank of Australia (RBA) to begin cutting interest rates, after having held rates steady at 4.35% at its past four meetings.
RBA Governor Michele Bullock noted today that the central bank remains data-driven and “isn’t ruling anything in or out”.

The US ISM services index for May is due out today; the index likely increased to 51.0 in May, from 49.4 in April.
A rebound is expected as regional Fed surveys have been pointing to a modest improvement.
The US private sector ADP employment report, a precursor to the non-farm payrolls report on Friday, is also on the cards today.
Private payrolls are likely to have increased by 175k in May, following a 192k increase in April.

The Bank of Canada is likely to hold its overnight target rate steady today, at 5.0%.
This even as inflation surprised to the downside in the first three months of the year.
The National Bank of Poland will also meet today to decide on rates and is largely expected to keep rates on hold.
The central bank last cut rates in October 2023.

Locally, the industry-wide PMI for May is due out today; the index is currently above the 50pt benchmark, at 50.3.
The BER will release the Q2:24 business confidence data; the index improved to 30 in Q1:24.

Brent crude oil is currently at $77.50/bbl; ($77.52/bbl*).
Gold is at $2340/oz ($2323/oz*).
SA CDS 237bps*, Brazil 144bps* and Turkey 266bps*.
Yields: US 10yr at 4.32%*, German bund at 2.53%*, SA 10-year generic at 11.94%*, SA’s R2030 at 10.56%*.

* Denotes yesterday’s close.

Key events and data:

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