LOCKDOWN LEVEL 3 [DAY 18]

TOTAL DAYS 83 – 07 HOURS 05 MINUTES

 By the close of trade on Wednesday, the South African rand strengthened against the US dollar.

  • President Ramaphosa mentioned in a live state broadcast that South Africa was about to enter a new relaxed phase of level 3.  When and exactly just how…the mechanics are still being worked out.
  • The United States on Wednesday pressed China over its treatment of Uighur Muslims and Hong Kong, just as Secretary of State Mike Pompeo met a top official from Beijing in Hawaii to assess soaring tensions. Pompeo met over nearly nine hours at a Honolulu military base with senior Chinese official Yang Jiechi, in the two countries’ highest-level meeting since the coronavirus pandemic sent tensions soaring.
  • News of additional stimulus measures by major central banks.
  • In the US, homebuilding increased less-than-expected in May, but a strong rebound in building permits for future home construction suggested that the housing market was starting to emerge from the COVID-19 crisis along with the broader economy.
  • Applications for loans to purchase homes surged last week to a near 11-1/2-year high.
  • The Federal Reserve (Fed) Chairman, Jerome Powell  stated with a full U.S. economic recovery out of reach until the coronavirus pandemic is brought to heel, the Federal Reserve will use its “full range of tools” to cushion households and businesses
  • The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond rose to 7.87%. Further, the yield on 2023 bond declined to 5.16% while that for the longer-dated 2030 issue rose to 9.43%.

In early trade on Thursday, the US dollar is trading 0.4% higher against the South African rand at R17.2642, while the euro is trading 0.3% higher at R19.4036.  The British pound has gained 0.2% against the South African rand to trade at R21.6370.

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

  • The European Union’s chief executive, Ursula von der Leyen, said on Wednesday that the bloc will do its best to seal an agreement on new ties with Britain by the end of the year but will not compromise its core values, notably on fair competition. Britain left the EU, the world’s largest trading bloc, on Jan. 31 after 47 years of membership, to the huge regret of the EU, and there has been little progress on designing a new relationship with a year-end deadline looming.
  • The eurozone’s consumer price index (CPI) slowed to a four-year low in May, pulled down by falling energy prices.
  • In the UK, inflation fell to its lowest since June 2016 last month, as the coronavirus pandemic adversely affected demand from the global economy and oil prices tumbled.
  • The Bank of England is expected to expand its quantitative easing program on Thursday, but economists do not expect negative interest rates to be implemented this time around. The Bank’s latest monetary policy decision comes as the U.K. economy attempts to recover from an unprecedented 25% contraction across March and April as lockdowns forced by the coronavirus pandemic hammered economic activity.
  • Australian unemployment surged in May and another swathe of jobs were lost as ongoing restrictions to stem the spread of the coronavirus kept large parts of the economy shuttered. The jobless rate advanced to 7.1% from a revised 6.4% in April vs economists’ median estimate of 6.9%, data from the statistics bureau showed in Sydney. Employment plunged by 227,700 in May after falling an upwardly revised 607,400 in April. The participation rate fell to 62.9%. Economists had penciled in 63.6%.

In early trade on Thursday, the euro has marginally slipped against the US dollar to trade at $1.1240, while it has gained 0.1% against the British pound to trade at GBP0.8969.

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

https://www.covid19sa.org/