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

  • Investors mulled the South African President, Cyril Ramaphosa’s economic recovery plan, while worries about a second wave of COVID-19 weighed on global equities. The narrative of job creation vs job opportunities seems polls apart. Real jobs are what the political leaders are calling for. The extension and widening of social grants was a hot topic.
  • In the US, the number of people filing new claims for jobless benefits rose to a two-month high last week, stoking fears that the COVID-19 pandemic was inflicting lasting damage to the labour market.
    US jobless claims for the week of October 10 do not look good. Initial claims rose to 898k from an upwardly revised 845k (consensus 825k). They are obviously moving in the wrong direction, hitting the highest level since the week of August 21st and remain way above anything experienced during the Global Financial Crisis (peak was 665k the week of March 27, 2009). It is possible that recent airline job losses are the main upside factor in this report, but the general news flow reinforces our concerns that there are major strains persisting in the jobs market.
  • The Philadelphia Fed manufacturing index surged in October.
  • Meanwhile, the US President, Donald Trump, stated that he was willing to raise his offer of $1.80tn for a COVID-19 relief deal with Democrats in Congress, but the idea was shot down by his fellow Republican, Senate Majority Leader, Mitch McConnell.  Kristalina Georgieva, the managing director of the International Monetary Fund, told CNBC Thursday that she has “no doubt” the U.S. will implement a new economic stimulus package that will help reduce the current uncertainties for the global economy. The IMF boss said that the impact of a U.S. stimulus package would be much-needed positive whenever it’s introduced, adding that if it were implemented earlier it would “provide a boost to certainty and certainty is something we do need in this crisis.”
  • Treasury Secretary Steven Mnuchin said Thursday that the White House won’t let differences over funding targets for Covid-19 testing interrupt stimulus talks with top Democrats. Stimulus talks between the White House and Congress have been deadlocked for weeks, but the prospects for a deal before the 2020 election appeared to dim on Wednesday. Mnuchin minimized chances of a pre-election breakthrough and House Speaker Nancy Pelosi, D-Calif., said the two sides have yet to reconcile key differences. Pelosi and Mnuchin are expected to speak again on Thursday with news available on Friday.
  • China is the only large nation that is expected to grow this year, with booming export demand driving an industrial rebound and the nation’s control of the Covid-19 outbreak allowing it to also reopen the domestic economy. Data for the third-quarter due next week are predicted to show gross domestic product regaining all the ground lost in the first half of the year, according to a Bloomberg survey. Industrial output is forecast to continue its V-shaped recovery and retail sales are set to continue growing, although they’re still well below the level in 2019.
  • 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 4.46%, while that for the longer-dated 2030 issue dropped to 9.40%.

In early trade on Friday, the US dollar is trading higher against the South African rand at R16.6566, while the euro is trading higher at R19.5020.  The British pound has remained static against the South African rand to trade at R21.4741.

By the close of trade on Thursday, the euro advanced against most of the major currencies.

  • European Central Bank President Christine Lagarde on Thursday said her organization would be prepared to impose further emergency measures to tackle the economic fallout from the coronavirus crisis, with the region confronting a rapid upsurge of Covid-19 infections. “We are still in the long grass for the moment and there is still a lot of work to be done, especially as from this corner of the world in Europe, we are seeing recurrences of contagion,” Lagarde stated in a media briefing.
  • On BREXIT EU’s Barnier says there is still a lot of work to be done in London next week for negotiations which grind on.  Barnier earlier echoed statements that a deal is still possible but not at any cost.

In early trade on Friday, the euro has marginally slipped against the US dollar to trade at $1.1704, while it has gained 0.1% against the British pound to trade at GBP0.9078.