The past week was characterised by continued buoyancy in equity markets, driven by optimism created by trade deals between the US and certain Asian countries, as well as the belief that a similar agreement will be reached with the EU by the August 1st deadline.

Resilience in US economic data contributed to this improvement. New all-time highs in US equities also contributed to the JSE ALSI hitting a new all-time high above 100,000.

Domestically, lower-than-expected CPI inflation in June has raised expectations that the Reserve Bank may reduce the repo rate at its MPC meeting this week. Such a move would be further strengthened if the Federal Open Market Committee also decided to reduce the Fed Funds rate one day earlier.

The Fed has been under considerable pressure from President Trump to lower rates. However, amidst the uncertainty of where tariffs will end and how much inflation they will generate, it is not by any means a foregone conclusion that rates will be cut either in the US or SA.