In the loop 04 June 2025

In the loop

Shireen Darmalingam

What you should know this morning:

The rand is stronger this morning, at R17.86/$, after closing weaker yesterday (R17.89/$*).
EM currencies were mixed yesterday; the COP (+1.3%), BRL (+0.6%) and MYR (+0.3%) were the biggest gainers; the PLN (-1.0%), HUF (-0.6%) and CZK (-0.5%) were the biggest losers.
Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.

BOE Governor Andrew Bailey yesterday noted that the outlook for interest rates in the UK would depend on whether wage growth slows according to expectations for the year.
This is in an environment of elevated economic uncertainty.
Bailey added that he had voted for a 25 bps rate cut at the last meeting “because the job market has loosened”.
Businesses have also been expecting to pay lower awards.
BOE Deputy Governor Sarah Breeden noted that she has seen enough evidence of the job market weakening, which justified her vote for a rate cut.
Policymaker Catherine Mann, however, voted to leave rates on hold.
She noted that she was concerned about recent financial market volatility, particularly in an environment in which “volatile inflation could influence behaviour”.

Atlanta Fed President Raphael Bostic yesterday commented that he is in no rush to lower interest rates.
He indicated that he would like to see “a lot” more progress being made on bringing inflation down before voting for a rate cut.
Bostic believes that the best approach for the FOMC is to exercise patience with regard to monetary policy.
While the latest inflation data has been encouraging, Bostic remains hesitant to declare a victory on inflation.
Several Fed policymakers have also indicated a patient approach as preferred until they have a better understanding of the impact of President Trump’s policies on tariffs, immigration and taxes.

Fed Governor Lisa Cook noted that she expects tariffs to potentially stoke inflation and weaken employment.
Cook emphasized the importance of price stability when considering future interest rate adjustments.
She noted that “price stability is essential for achieving long periods of strong labour market conditions”.
The Fed is widely expected to hold interest rates steady at its next FOMC meeting on 17-18 June.

The US private sector ADP employment report is due out today; private payrolls are likely to have increased by 114k in May, after having increased by 62k in April.
The private sector data is a precursor to the non-farm payrolls (NFP) due out on Friday.
NFP for May are expected to have increased, by 130k, from an increase of 177k in April.

Locally, the S&P Global industry-wide PMI for May is due out today; the index is currently at the 50pt benchmark.
The BER will release Q1:25 business confidence data; the index remained at 45 in Q1:25.

Brent crude oil is currently at $65.36/bbl; ($65.63/bbl*).
Gold is at $3351/oz ($3348/oz*).
SA CDS 204bps*, Brazil 156bps* and Turkey 308bps*.
Yields: US 10yr at 4.44%*, German bund at 2.52%*, SA 10-year generic at 10.16%*, SA’s R2035 at 10.11%*.

* Denotes yesterday’s close.

Key events and data:

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