LOCKDOWN LEVEL 3 [DAY 3]
TOTAL DAYS 68 – 07 HOURS 05 MINUTES
By the close of trade on Tuesday, the South African rand strengthened against the US dollar.
- Growing hopes of a global economic recovery, prompting investors to ditch safe-havens for high yielding assets.
- In the US, President, Donald Trump vowed to deploy the military to halt violence if mayors and governors failed to regain control of the streets.
- Trade war saga set to resume! Remember the phase one trade deal that the Republican Senate really wanted President Trump to ink with China (or else no quick impeachment acquittal, well it seems to be on life support. Chinese officials say they want to change the environment for foreign investment. This year’s government work report states that the country must actively use foreign capital, as well as significantly reduce the list of issues affecting foreign investment access, and draw up a list of negative issues blocking cross-border service trade. They plan to give Pilot Free Trade Zones greater autonomy for reform and opening up, and create a market environment in which domestic and foreign enterprises are treated equally and fairly.
- On the data front, the ISM-NY business conditions index sharply recovered in May from an all-time low in April.
- It could take the US economy nearly 10 years to recover from fallout stemming from the coronavirus pandemic and lockdowns to curb the spread of disease, the Congressional Budget Office said Monday. The CBO now projects that over the 2020-2030 period, cumulative nominal output will be $15.7 trillion less than it previously said in January, a 5.3% cut. It dropped its real GDP forecast for the same period by $7.9 trillion, or 3%, according to the report. US GDP isn’t expected to recover to the CBO’s previously forecast level until the fourth quarter of 2029, the report showed.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.32%. Further, the yield on 2023 bond declined to 5.14% while that for the longer-dated 2030 issue fell to 8.73%.
In early trade on Wednesday, the US dollar is trading 0.4% lower against the South African rand at R17.1027, while the euro is trading 0.1% lower at R19.1497. The British pound has declined 0.1% against the South African rand to trade at R21.5098.
By the close of trade on Tuesday, the euro declined against most of the major currencies.
- GDP figures from the Bureau of Statistics show Australia’s economy shrank 0.3 per cent in the March quarter, amid bushfires and the early stages of the coronavirus pandemic. This makes it certain that Australia will suffer its first recession in 29 years, as the full impact of coronavirus-related shutdowns occurred during the current June quarter.
- The European Central Bank skewed asset purchases under its new emergency program toward Italy, underscoring the institution’s crisis-fighting role in the face of the coronavirus outbreak. The ECB bought 37.4 billion euros ($42 billion) of Italian debt since the plan started in late March, it said on Tuesday when issuing details for the first time.
- Meanwhile, the European Central Bank (ECB) is expected to increase its EUR750.00bn bond-buying programme, the Pandemic Emergency Purchase Programme, probably by around EUR500.00bn.
In early trade on Wednesday, the euro has advanced 0.2% against the US dollar to trade at $1.1196, while it has marginally gained against the British pound to trade at GBP0.8903.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.