Federal Reserve Faces Subpoena Delay Amid Investigation Into Chair Jerome Powell 
Morgan Stanley Raises KOSPI Target to 5,200 on Strong Earnings and Reform Momentum 
OCBC Raises Gold Price Forecast to $5,600 as Structural Demand and Uncertainty Persist 
BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
ECB Signals Steady Interest Rates as Fed Risks Loom Over Outlook 
New York Fed President John Williams Signals Rate Hold as Economy Seen Strong in 2026 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
The Rand is the easily the worst performing major currency in the month-to-date and week-to-date periods with the latest bout of weakness coming on increased political interference in the country’s central bank.
USDZAR is currently trading around 13.3786 levels. It made intraday high at 13.5356 and low at 13.3575 levels.
Worries around interference on institutions, announcements of populist measures may cause sporadic spells of weakness. However, the benign external environment will remain supportive.
Parameters: Long SAGB 2048 (FX unhedged) with a target at 8.99% and a stop at 10.39%.
Buying SAGB 8.75% 28-February-2048 bonds is recommended, which is currently trading at a yield of 9.99%. The position is FX-unhedged, with USDZAR at 13.89. We place a stop loss at a 10.39% yield level and a target of 8.99%. The trade generates carry of +22bp per month, inclusive of funding costs. Our trade horizon is 6-9 months.
Thesis: Fundamentals continue to remain supportive with lower inflation, shrinking current account deficit and retail sales. Slow policy normalization in DMs and improved EM fundamentals might continue to support high yielding EM assets.
Key levels & strategy: We recommend maintaining modest exposure at these levels as the newsflow around SARB independence clouds the sentiment. If the political situation improves, we can see yields falling further.
What to watch for: CPI (19 Jul), retail sales (19 Jul), SARB (20 Jul).
