LOCKDOWN LEVEL 3 [DAY 4]
TOTAL DAYS 69 – 07 HOURS 05 MINUTES
By the close of trade on Wednesday, the South African rand strengthened against the US dollar.
- Investor appetite for riskier assets improved on prospects of a swift global economic rebound. After a brutal March wrecked an 11-year bull market, there seems be little doubt on Wednesday that equity markets in the U.S. are returning to bullish form after being rocked by COVID-19. That at least applies to recent gains for the technology-laden Nasdaq Composite Index, which is on the brink of topping its Feb 2019 all-time closing high.
- The Federal Reserve has approved an expansion of its $500 billion emergency program to support state and local governments. The expansion will allow all states to have at least two cities or counties eligible to tap the Fed support program regardless of population. The Fed board approved the change Wednesday on a 5-0 vote. It marked the second time the program, named the Municipal Liquidity Facility, has been expanded.
- Finding good news in the loss of another 3 million jobs isn’t easy, but the steep drop in private payrolls for May could be a sign that the worst over. ADP reported Wednesday that companies shed another 2.76 million positions last month. Under normal circumstances, such a report would be considered catastrophic. But these aren’t normal times. Instead, a count that was well below the 8.75 million estimate provided hope that the most severe jobs crisis in U.S. history is about to turn around as an economy battered by the coronavirus pandemic takes its first steps to reopening.
- The ISM non-manufacturing activity index came in above consensus forecast for May.
- Factory orders plunged on a monthly basis in April.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.22%. Further, the yield on 2023 bond declined to 5.04% while that for the longer-dated 2030 issue fell to 8.62%.
In early trade on Thursday, the US dollar is trading 0.3% higher against the South African rand at R16.9785, while the euro is trading 0.1% higher at R19.0412. The British pound has marginally gained against the South African rand to trade at R21.2950.
By the close of trade on Wednesday, the euro advanced against most of the major currencies.
- The European Central Bank (ECB) is expected to increase its coronavirus crisis asset-purchase program at this week’s meeting, amid fears of falling inflation and the steepest economic contraction since World War II for the euro zone. In March, the ECB unveiled its Pandemic Emergency Purchase Programme (PEPP), which will see it buy 750 billion euros ($819 billion) in euro zone government bonds this year.
- The eurozone producer price index (PPI) fell more-than-expected in April, as the economy slowed to a crawl in the second month of containment measures against the coronavirus pandemic.
- Meanwhile, Germany’s services sector contracted at a slower pace in May after a record contraction in the previous month, as restrictions to contain the coronavirus were lifted. On the flipside, German unemployment rate rose to its highest level since late 2015, underscoring the struggle that even countries with well-established safety nets face in shielding workers from the pandemic-induced crisis.
In early trade on Thursday, the has euro slipped 0.2% against the US dollar to trade at $1.1214, while it has gained 0.1% against the British pound to trade at GBP0.8941.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.