By the close of trade on Tuesday, the South African rand weakened against the US dollar.

The country woke to shivers as the winter bite takes hold, with much of the countries mountains covered in Snow.  Across the globe Fears of a second wave of coronavirus infections weighed on investor appetite for riskier assets.

  • Beijing has faced a mini-outbreak. Around 100 people in one part of the city, now cordoned off in what amounts to a lockdown. If Beijing in its entirety ever goes Wuhan, this will be a disaster for China. Beijing escaped the winter with less than 500 reported cases of the new SARS coronavirus. If they start climbing and surpass that now, it could erase the recent positive news out of Wuhan, where testing of some 11 million people there turned up just around 300 infections, according to public health officials. The new infections in Beijing have been traced to a wholesale meat and fish market
  • In the US, retail sales shattered already-lofty expectations for May as consumers freed from the coronavirus-induced lockdowns began shopping again. The 17.7% headline gain including food sales easily topped the previous record from October 2001 and beat the 8% estimate from economists surveyed by Dow Jones. Retail sales powered 16.8% higher from April, more than double the estimate of 8% from Dow Jones and reversing a 16.4% plunge from a month ago. Clothing and accessories stores reported the biggest percentage gain at 188% while sporting goods, hobby, musical instruments and book stores rose 88.2%.
  • Industrial production rebounded in May but recouped only a fraction of the prior month’s record decline, suggesting some stabilization in the sector after the COVID-19 pandemic disrupted supply chains and hurt demand.
  • Federal Reserve Chairman Jerome Powell warned Tuesday that the U.S. economy faces a deep downturn with “significant uncertainty” about the timing and strength of a recovery. He cautioned that the longer the recession lasts, the worse the damage that would be inflicted on the job market and businesses. In testimony to Congress, Powell stressed that the Fed is committed to using all its financial tools to cushion the economic damage from the coronavirus.
  • The yield on benchmark government bonds rose on Monday. The yield on 2026 bond rose to 7.81%. Further, the yield on 2023 bond advanced to 5.18% while that for the longer-dated 2030 issue rose to 9.33%.

In early trade on Wednesday, the US dollar is trading 0.2% higher against the South African rand at R17.2735, while the euro is trading 0.2% higher at R19.4563.  The British pound has marginally declined against the South African rand to trade at R21.6744.

By the close of trade on Tuesday, the euro declined against most of the major currencies.

  • The ECB can still do more to fight the economic effects of the Covid-19 crisis, Executive Board member Fabio Panetta said Tuesday, saying it could add junk bonds to its quantitative easing operations “if necessary.” Speaking shortly after the ECB increased its Pandemic Emergency Purchasing Programme by EUR600 billion, Panetta said the ECB had “learned the lessons of the sovereign debt crisis and acted rapidly and forcefully.
  • German consumer price Index (CPI) declined in May, compared with April and continued to slow year-on-year, driven by a sharp drop in energy prices. On the contrary, German economic sentiment index rose in June. A separate gauge measuring investors’ assessment of the economy’s current conditions rose in June.
  • German Chancellor Angela Merkel expects the European Union to agree on a recovery plan in July, even though there’s strong opposition to the current proposal. Merkel, who was speaking on Tuesday to conservative lawmakers in a closed-door meeting, also said that Germany should be able to receive funds from the plan

In early trade on Wednesday, the euro marginally slipped against the US dollar to trade at $1.1263, while it has gained 0.2% against the British pound to trade at GBP0.8976.

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