Daily Market Report 2 June

Daily Market Report – 2 June 2025

Macro Context: SARB Data and OECD Report in Focus

Key Domestic Events

  • SARB Quarterly Bulletin: Will provide a holistic view of SA’s economic pulse — growth, credit conditions, debt ratios.
  • GDP Print: Q1 is expected to show flat to marginal growth (0.0%–0.6% annualised).
  • OECD Economic Survey (Thursday): A public scorecard on structural reforms (or the lack thereof) and governance.

FX View: USD-ZAR

Metric Value
Spot Rate 17.8300
Short-Term Range 17.85 – 18.15
Correction Target 18.2675 (23.6% Fibo retrace)
Trend Support                                    17.6050 (Dec 2024 low)

ZAR Setup

  • Heavily overbought on most technical studies.
  • Friday’s bounce post-SARB hints at early-stage consolidation.
  • Correction toward 18.15–18.60 seen as natural (not trend-ending).

What Drives the Bounce?

  • Likely weaker-than-expected GDP and business confidence.
  • Soft manufacturing PMI or vehicle sales could sour sentiment.
  • Global jitters: China-US trade threats are back — and ZAR is a proxy for EM risk.

Fixed Income: Bonds Taking a Breather?

Recent Moves

  • R209 yield back to Dec 2024 lows — markets priced in a strong GNU, fiscal stabilisation, and lower inflation target.

Now What?

  • Short-term pullback possible if ZAR sells off — especially in long-dated paper.
  • However, medium-term outlook is still bullish on:
    • FATF greylist exit
    • More SARB cuts
    • Inflation anchored around 3%

FRA Market: Still Pricing One to Two Cuts

FRA Tenor Rate Cut Implied
3×6 ~29bp
6×9 ~47bp

Interpretation

  • Market leaning toward another cut in Q3, possibly a second if inflation remains tame.
  • But inflation targeting shift will cap aggressive pricing — SARB still wants credibility.

Global Overlay: USD Still Under Pressure

Key Risks:

  • Trump’s tariff revival = fresh USD headwind
  • Fed likely to ease by Sept = further USD weakness

Despite temporary rebounds (e.g. London fix support), the USD index is flirting with structural breakdown, boosting EMFX.

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