In the loop 18 June 2025

In the loop

Christelle Grobler

What you should know this morning:

The rand is trading at R17.96/$ this morning, after closing weaker yesterday (R17.98/$*).
EM currencies were mixed yesterday; the HUF (-1.1%), ZAR (-1.1%) and KRW (-1.0%) were the biggest losers; the ARS (+1.7%), COP (+0.1%) and RUB (+0.1) gained.
Asian equity markets are mixed this morning; the Nikkei and the Shanghai Composite are up, while the Hang Seng is down.

Central bank watch: the US Fed and the Riksbank will decide on rates today.
Sweden’s Riksbank is expected to cut rates by 25bps today, which would see the benchmark rate down to 2.00%.
GDP contracted in Q1:25 and inflation slowed, opening the door to further easing by the bank.
The US FOMC is widely expected to maintain the range for the fed funds rate at the current 4.25% to 4.50%.
Continued economic uncertainty amid the Trump Administration’s tariff plans, as well as escalating conflict in the Middle East, cloud the outlook.
Fed policymakers have signalled a patient and cautious approach; President Trump is likely to continue to put pressure on the Fed to cut rates.
The committee will publish an updated set of economic projections; this may see higher inflation and lower growth forecasts, compared to the March estimates.
Recent labour data has remained relatively resilient, but remains consistent with a cooling in the jobs market.
Initial jobless claims for the week ended 14 June are due out today; initial claims likely remained elevated.

The US NAHB housing market index fell back in June.
The index dropped to 32 in June, from 34 in May; this sees homebuilder confidence at its lowest level since December 2022.
Builders anticipate tariffs to add significantly (almost $11,000 per home) to construction costs, according to the NAHB.
High mortgage rates and the growing supply of existing home stock are dampening demand for new homes.
Today sees the release of MBA mortgage applications for the week ended 13 June.
Housing starts and building permits for May will also be published today.

Japan’s core machine orders came in stronger than expected for April.
Core machine orders were down 9.1% m/m in April, after rising 13.0% m/m in March.
In y/y terms, orders were up 6.6% in April, compared to 8.4% in March.
Japan’s trade deficit widened in May; exports declined for the first time in eight months.
Exports fell 1.7% y/y in May, with declines in cars, steel, and mineral fuel.
Imports dropped more than expected in May, by 7.7% y/y.

Locally, the focus will be on CPI inflation data for May.
CPI was likely steady, at 2.8% y/y, in May, remaining below the bottom of the SARB’s inflation target range (3-6%).
From June, we’d expect inflation to trend higher, with renewed upside risk from higher oil prices owing to the escalating conflict in the Middle East.
Retail trade sales for April are also due today.
Sales volumes might have accelerated in April after weaker-than-expected retail sales in March.
Retail trade sales contracted 0.2% m/m in March, with growth slowing to 1.5% y/y, down from 4.1% y/y in February.

Brent crude oil is currently at $76.08/bbl; ($76.45/bbl*).
Gold is at $3391/oz ($3388/oz*).
SA CDS 189bps*, Brazil 152bps* and Turkey 294bps*.
Yields: US 10yr at 4.39%*, German bund at 2.54%*, SA 10-year generic at 10.15%*, SA’s R2035 at 10.10%*.

* Denotes yesterday’s close.

Key events and data:

08h00: UK CPI, retail price index (May)
10h00: SA CPI (May)
10h00: Eurozone current account (April)
11h00: Eurozone CPI (May – final)
13h00: SA retail sales (April)
13h00: US MBA mortgage applications (13 June)
14h30: US housing starts, building permits (May), initial jobless claims (14 June)
20h00: US FOMC rate decision – no change expected

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