In this week’s market review, we dive into the key economic data emerging from the US, focusing on the steady headline and core inflation rates as revealed by the PCE quarterly report. Despite visible disinflationary trends, these are not substantial enough to prompt the Federal Reserve to alter its cautious approach soon. We anticipate the Fed maintaining higher interest rates for a prolonged period, though we are hopeful for a potential easing by the year’s end, contingent on future labour market data, including the upcoming non-farm payrolls.

Switching focus to South Africa, the conversation turns to the significant political developments following the recent elections. For the first time since the establishment of democracy, the African National Congress (ANC) has lost its majority, a result declared amidst contentious circumstances by the Independent Electoral Commission (IEC). This electoral outcome is seen as a potential turning point, breaking the longstanding political stalemate attributed to the ANC’s dominance. The possibility of an ANC-Democratic Alliance (DA) coalition is discussed as a likely scenario that could foster economic recovery and stability, though challenges in forming and maintaining such a coalition are acknowledged.

We conclude with a discussion on the broader implications of these political changes for South Africa’s democracy and market stability. The overview paints a picture of cautious optimism, with a call for continued vigilance in monitoring both international economic indicators and domestic political developments.