LOCKDOWN STAGE 4 – DAY 56 06 HOURS AND 59 MINUTES
By the close of business on Thursday the Rand had strengthened against the Greenback.
- On Thursday, the SA Reserve Bank’s monetary policy committee voted to reduce the repo rate for the fourth time this year, from 4.25% to 3.75%. As a result of the cut, the prime lending rate will fall to from 7.75% to 7.25%. The repo rate is the benchmark interest rate at which the Reserve Bank lends money to other banks.
- Efforts to forecast the U.S. economy’s path to recovery from the current deep downturn face “a whole new level of uncertainty,” Federal Reserve Chairman Jerome Powell said Thursday. Not only is there the difficulty predicting how the coronavirus pandemic will play out, it is also unclear how American workers and consumers will react as lockdowns aimed at limiting the spread of the virus are lifted, Powell said in an address to a virtual Fed conference.
- Treasury Secretary Steven Mnuchin said Congress will very likely need to pass more stimulus legislation for the U.S. economy, as the nation struggles to recover from the coronavirus outbreak.
- China made a rare decision not to set a target for its economic growth this year due to uncertainties about the impact of the coronavirus. “I would like to point out that we have not set a specific target for economic growth this year,” Chinese Premier Li Keqiang said in an English-language text of the work report he was set to deliver on Friday.
- The United States announced its intention to withdraw from the 35-nation Open Skies treaty that permits unarmed aerial surveillance flights over participating countries, saying Russia has repeatedly violated the pact’s terms. Senior administration officials said the pullout will formally take place in six months, based on the treaty’s withdrawal terms. It was the latest move by President Donald Trump’s administration to remove the United States from a major global treaty, following withdrawal from the Intermediate-range Nuclear Forces Treaty with Russia last year.
- The Philadelphia Fed manufacturing index came in worse than expectations in May.
- Manufacturing and Services PMI readings came in better-than-expected in May.
- The yield on benchmark government bonds ended mostly higher yesterday. The yield on 2026 bond rose to 7.26%. Further, the yield on 2023 bond advanced to 5.02% while that for the longer-dated 2030 issue fell to 8.87%.
In early trade on Friday, the US dollar is trading 0.2% higher against the South African rand at R17.6243, while the euro is trading 0.1% higher at R19.2868. The British pound has gained 0.2% against the South African rand to trade at R21.5337.
By the close of trade on Thursday, the euro declined against most of the major currencies.
- Germany’s flash manufacturing PMI rose less-than-expected in May.
- The eurozone’s preliminary manufacturing and services PMI rose more-than-expected during the same period but economic activity in the region remained very depressed even as lockdown measures are being gradually lifted.
In early trade on Friday, the euro has slipped 0.1% against the US dollar to trade at $1.0943, while it has marginally weakened against the British pound to trade at GBP0.8958.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.