A pedestrian day in the markets yesterday with bank holidays in both the USA and United Kingdom. By the close of trade on Monday, the South African rand weakened against the US dollar.

Tension between the US and China over civil liberties in Hong Kong dented appetite for riskier assets.   Discussions about whether we are moving closer to a world without cash, regulators often focus on data showing consumers are purchasing more of their goods and services digitally. This trend has only accelerated since the coronavirus pandemic — not least because of fears that the virus could spread through the handling of cash. The concern was so great that in February the People’s Bank of China began sterilising banknotes in regions affected by the virus. In March, the US Fed confirmed it was quarantining bills arriving from Asia prior to recirculation.

  • Bank of Japan Governor Haruhiko Kuroda said on Tuesday that currently the risk is small that rising credit costs triggered by the spread of the coronavirus will affect the nation’s financial system. Kuroda told lawmakers that commercial banks, including regional banks, have sufficient capital bases.
  • The latest world trade figures for March, show a massive fall in trade volumes, especially in the eurozone where there was a decline of -9% YoY (intra- and extra- eurozone trade). US trade volumes also declined by a significant -5.2% YoY but Asian trade showed strong rebound month on month, which is consistent with China gradually re-opening in March.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond rose to 7.61%. Further, the yield on 2023 bond advanced to 5.43% while that for the longer-dated 2030 issue fell to 9.05%.

In early trade on Tuesday, the US dollar is trading 0.3% lower against the South African rand at R17.5875, while the euro is trading 0.2% lower at R19.1953.  The British pound has declined 0.2% against the South African rand to trade at R21.4775.
By the close of trade on Monday, the euro declined against most of the major currencies.

  • The German economy posted its largest decline in gross domestic product (GDP) on a quarterly basis in 1Q20, its worst since the financial crisis and entered a recession due to the coronavirus pandemic and the lockdown implemented in mid-March.
  • On the contrary, business morale in the country rebounded in May, as a reopening of the economy boosted expectations among companies.
  • One of the European Central Bank’s key policy makers signaled that the institution is very likely to boost its emergency bond-buying program to fight the coronavirus pandemic.  With inflation low, there is room to innovate and act “rapidly and powerfully,” Bank of France Governor Francois Villeroy de Galhau told a conference in Paris.  Galhau also signaled that he’d like to see limits on the 750 billion-euro ($817 billion) plan loosened even more.

In early trade on Tuesday, the euro has advanced 0.1% against the US dollar to trade at $1.0914, while it has marginally weakened against the British pound to trade at GBP0.8937.

Below is a link to a very detailed Covid-19 picture giving stats and graphs.