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

  • The COVID-19 pandemic has substantially affected labor markets. As noted in a recent Regional Economist article, more than 33 million U.S. workers applied for unemployment insurance between mid-March and the last week of April. Furthermore, the unemployment rate jumped from 3.5% in February to 14.7% in April.
  • South African manufacturing production contracted for the 15th month in August, even as COVID-19 lockdown measures were lifted, suggesting that the manufacturing sector could weigh on an economy that has already contracted by an annualised 51.0% in the three months to the end of June.
  • The Covid-19 pandemic will exact a $16 trillion toll on the U.S.  Four times the cost of the Great Recession, when adding the costs of lost lives and health to the direct economic impact, according to former U.S. Treasury Secretary Lawrence Summers and fellow Harvard University economist David Cutler. About half of that amount is related to lost gross domestic product as a result of economic shutdowns and the ongoing spread of the virus, while the other half comes from health losses including premature death and mental and long-term health impairments
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond declined to 7.15%. Further, the yield on 2023 bond dropped to 4.50%, while that for the longer-dated 2030 issue fell to 9.42%.

In early morning trade on Tuesday, the US dollar is trading higher against the South African rand at R16.5722, while the euro is trading higher at R19.5466.  The British pound has gained against the South African rand to trade at R21.6126.

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

  • The European Central Bank (ECB) Vice President, Luis de Guindos, stated that the eurozone economy is losing momentum and that the ECB will react accordingly.
  • British Prime Minister Boris Johnson will on Monday impose a tiered system of further restrictions on parts of England as the COVID-19 outbreak accelerates, though anger is rising at the cost of the stringent curtailment of freedoms. Johnson will hold a meeting of the government’s emergency COBRA committee and then address parliament, offering lawmakers a vote later in the week on the measures. He will then hold a press conference alongside England’s chief medical officer and his finance minister. Johnson’s three-tiered local lockdowns will include shutting bars, gyms, casinos and bookmakers in some areas.
  • Consumers spent more last month as they started their early Christmas shopping and spruced up their homes, according to new figures. The latest BRC-KPMG Retail Sales Monitor showed that total sales increased by 5.6% in September. Separate consumer spending figures from Barclaycard showed a 2% increase, representing the strongest improvement in credit card spending since February, before the pandemic fully hit.
  • China’s ban on Australian thermal and coking coal imports, which has left several Australian vessels stranded at Chinese ports, is likely to remain in place indefinitely amid deteriorating trade ties between the two nations, analysts said. Chinese authorities communicated the ban verbally, suggesting the informal approach was politically motivated, commodities analysts said, though it also aligned with tightening coal import quotas and Beijing’s goal to reduce consumption and carbon emissions.

In early morning trade on Tuesday, the euro has slipped against the US dollar to trade at $1.1797, while it has marginally gained against the British pound to trade at GBP0.9043.