LOCKDOWN LEVEL Ver 3.1 [DAY 38]

TOTAL DAYS 103 – 07 HOURS 12 MINUTES

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

  • A surge in US borrowing in 1Q20 by corporates and the government increased debt of the non-financial sector, which also includes households, to an all-time high of USD55.9 trillion, equivalent to 260% of GDP, says Fitch Ratings. With the 0.9% reduction in 1Q20 nominal GDP, the increase in debt ratio of households, corporates and government relative to GDP was the highest on record (dating to the mid-1950s), at 10pp. For households, this marked the most meaningful interruption in the steady de-leveraging – measured by a falling debt-to-GDP ratio – that began during the global financial crisis more than a decade ago.
  • On the data front, South African consumer confidence slumped to its worst levels in 35 years in 2Q20, as households grappled with the economic fallout of the phased lockdown restrictions.
  • The greenback gained ground, as demand for the safe-haven currency rose amid a new surge in COVID-19 cases.
  • In the US, JOLTS job openings surged to a record high in May and layoffs declined as businesses reopened, but the signs of improvement in the labour market have been overshadowed by a resurgence in COVID-19 cases that has forced some enterprises to shut down again.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.88%. Further, the yield on 2023 bond advanced to 5.06% while that for the longer-dated 2030 issue rose to 9.66%.

In early morning trade on Wednesday, the US dollar is trading 0.2% lower against the South African rand at R17.1386, while the euro is trading 0.2% lower at R19.3271.  The British pound has declined 0.1% against the South African rand to trade at R21.5218.

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

  • The Pound led major currencies in a rebound against the Dollar Tuesday as another round of Brexit trade talks got underway and Chancellor Rishi Sunak’s mini budget loomed large, although it could see substantial further gains in response to any progress in the deadlocked negotiations with the EU.
  • Saudi Arabia’s Deputy Defense Minister Prince Khalid bin Salman has received a phone call from British Defense Secretary Ben Wallace during which they discussed several issues, especially on regional and global security
  • The European Commission slashed its economic forecasts and warned that the European Union would suffer a deeper-than-expected recession because of the COVID-19 crisis. The eurozone is now forecasted to contract by 8.7% this year, compared with an earlier forecast for a decline of 7.7%.
  • On the data front, On the data front, industrial production in Germany rebounded less-than-expected on a monthly basis in May, and remains far below levels from before the pandemic.

In early trade on Wednesday, the euro has marginally advanced against the US dollar to trade at $1.1277, while it has weakened 0.1% against the British pound to trade at GBP0.8980.

CORONA / COVID-19

  • It shouldn’t “be a surprise” if the global death toll from the coronavirus begins to pick up pace again as the pandemic shows signs of accelerating across the globe, World Health Organization officials said Tuesday. For the month of June, reported Covid-19 cases across the globe have accelerated while the death toll has been falling.

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

https://www.covid19sa.org/