LOCKDOWN LEVEL 2 [DAY 30]
TOTAL DAYS 176 – 07 HOURS 40 MINUTES
By the close of trade on Tuesday, the South African rand strengthened against the US dollar. Is there a new Version of lockdown around the corner?
- The focus today will be the FED meeting decisions, and more importantly the statement thereafter as markets pick apart the speech to look for clues as to how long interest rates will be kept on hold or how the FOMC plan to manage inflation. While committed to keeping interest rates low for the next several years, the Federal Reserve still has plenty of work to do as it steers the U.S. economy through the pandemic. As central bank officials gather Tuesday and Wednesday for their policy meeting, a number of items are on the agenda, even as the mystery of where rates are headed has disappeared. The Federal Open Market Committee will provide its quarterly update on where it sees GDP, unemployment and inflation heading. It also will take up the issue of whether it should provide clearer guidance on what it will take to raise rates in the future. The announcement is at 8pm and the statement half an hour thereafter.
- Demand for risky assets was lifted by renewed hopes for a COVID-19 vaccine.
- Pres Trump yesterday made history in the signing of the Abraham accord peace deal. The parties to the deal are Israel, Bahrain and the UAE. The USA [Trump] stood as witness. The signing took place on the grounds of the Whitehouse.
- The US responded defiantly on Tuesday to a World Trade Organization report criticizing President Donald Trump’s tariffs on China, blasting the organization as “completely inadequate” in holding Beijing accountable. “The United States must be allowed to defend itself against unfair trade practices, and the Trump administration will not let China use the WTO to take advantage of American workers, businesses, farmers, and ranchers,” US Trade Representative Robert Lighthizer said in a statement.
- In the US, industrial production slightly rose on a monthly basis in August, However, the recovery showed signs of strain, suggesting that business investment in equipment could remain depressed through the end of the year as the COVID-19 pandemic drags on.
- The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond declined to 7.14%. Further, the yield on 2023 bond advanced to 4.42%, while that for the longer-dated 2030 issue dropped to 9.21%.
In early trade on Wednesday, the US dollar is trading 0.2% lower against the South African rand at R16.4244, while the euro is trading 0.2% lower at R19.4565. The British pound has declined 0.1% against the South African rand to trade at R21.1939.
By the close of trade on Tuesday, the euro declined against most of the major currencies.
- Japan’s Lower House Elects Yoshihide Suga As New Prime Minister. Japanese and international observers are now asking whether the Abe government’s economic-policy course (dubbed “Abenomics”) will change significantly under Suga, and if so, how? The answer will have important geopolitical implications. Japan, after all, is still struggling to overcome the negative shock from COVID-19, and its economic health is becoming ever more pivotal.
- Investor sentiment in Germany unexpectedly rose in September, signaling confidence in a recovery from the coronavirus.
- Stalled Brexit talks and rising new infections are a worrying sign for investors.
- A separate gauge of current conditions improved during the same period.
In early trade on Wednesday, the euro marginally slipped against the US dollar to trade at $1.1847, while it has weakened 0.1% against the British pound to trade at GBP0.9180.