In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is unchanged this morning, at R18.75/$, after closing stronger yesterday (R18.75/$*).
- EM currencies were mixed yesterday; the ZAR (+0.8%) and RUB (+0.3%) were the biggest gainers; the HUF (-0.9%), THB (-0.9%) and KRW (-0.8%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei is up, while the Hang Seng and Shanghai Composite are down.
- UK labour data will likely show that wage gains remained elevated at the start of Q2:24.
- Average hourly earnings, excluding bonuses, are expected to have increased to 6.1% y/y in April, from 6.0% y/y in March.
- The unemployment rate is expected to have remained steady, at 4.3%, in April.
- The data, however, will unlikely deter the BOE from cutting interest rates soon.
- Nonetheless, the BOE will keep a close eye on labour and wage data in the coming months.
- The US NFIB small business optimism index may have slipped slightly in May.
- The optimism index is likely to have eased to 89.6 in May, from 89.7 in April.
- A separate NFIB survey showed that a net 15% (the highest in a year) of small business owners plan to create new jobs in the next three months.
- However, fewer owners plan to raise compensation in the coming months.
- The US FOMC begins its 2-day policy meeting today; the Fed is expected to keep the Fed funds rate unchanged when the meeting concludes tomorrow.
- Investors will keep an eye on changes to both the inflation and GDP growth forecasts as well as the Fed's dot plot.
- ECB President Christine Lagarde commented yesterday that the central bank must remain cautious.
- Lagarde noted that last week’s interest rate cut won’t be the followed by further rapid rate cuts.
- She added that the bank would assess new projections at every step of the way before making decisions.
- Locally, manufacturing production for April is due out today; production is expected to have increased by 1.6% y/y in April, after having declined by 6.4% y/y in March.
- On a m/m basis, manufacturing production is likely to have increased by 1.9% in April, following a decline of 2.2% in March.
- Eskom: loadshedding remains suspended until further notice.
- SA election update: SA’s parliament is preparing to reconvene on Friday to elect a president.
- Brent crude is down this morning, and up by 5.8% year-to-date.
- The gold price is down this morning, and up by 11.7% year-to-date.
- Brent crude oil is currently at $81.54/bbl; ($81.63/bbl*).
- Gold is at $2303/oz ($2313/oz*).
- SA CDS 230bps*, Brazil 148bps* and Turkey 263bps*.
- Yields: US 10yr at 4.46%*, German bund at 2.67%*, SA 10-year generic at 11.83%*, SA’s R2030 at 10.37%*.
* Denotes yesterday’s close.
Key events and data:
- 08h00: Japan machine tool orders (May)
- 08h00: UK ILO unemployment rate (April), average weekly earnings (April)
- 12h00: US NFIB small business optimism (May)
- 13h00: SA manufacturing production (April)
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