LOCKDOWN LEVEL 1 Ver3 [DAY 8]  Wave 2


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

  • Treasury Secretary Steven Mnuchin said progress has been made in forging a COVID-19 relief deal after he held talks with Republican and Democratic senators Wednesday night. “We had a very productive call yesterday with a lot of people, so I think we’re making a lot of progress,” Mnuchin reported, ahead of a congressional hearing Thursday morning. “There’s more discussions going on today.” Mnuchin said that the “majority” of his own US$916 billion relief proposal is the same as a $908 billion bipartisan plan.
  • Data showed that South Africa’s manufacturing production index further declined on an annual basis in October, underscoring the fragility in the country’s recovery.
  • In the US, the number of people filing first-time claims for jobless benefits jumped to a near three-month high for the week ended 4 December, as mounting new COVID-19 infections led to more business restrictions.  The surprise jump in new jobless claims filings to the highest level since mid-September signals a weakening in the labor market that could drag down the economy into the first quarter. Initial claims for state unemployment benefits jumped to 853,000, rising 137,000 during the week ended Dec. 5 from the prior week, the largest weekly increase since the height of economic shutdowns in March. Economists had expected 730,000 claims, according to Dow Jones. They note the Thanksgiving holiday period could have added distortions in both weeks, but the trend is clearly negative.
  • Meanwhile, consumer price index (CPI) rose in line with market expectations on a monthly basis in November.
  • The yield on benchmark government bonds mostly rose yesterday. The yield on 2026 bond climbed to 6.94%. Further, the yield on 2023 bond advanced to 4.63% while that for the longer-dated 2030 issue marginally declined to 8.91%.

In early trade on Friday, the US dollar is trading lower against the South African rand at R15.0225, while the euro is trading higher at R18.2563.  The British pound has gained against the South African rand to trade at R19.9972.

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

  • The European Central Bank (ECB) held the key interest rates on hold and expanded its pandemic emergency purchase program by another EUR500.00bn, as a second wave of lockdown measures weighs on the region’s economic recovery. It also extended the program by nine months to March 2022, with the aim of keeping government and corporate borrowing costs at record lows.
  • ECB’s President Lagarde: All parties are preparing for a no deal Brexit. The Brexit deal talks will continue for another few days, until Sunday, at least. The European Union and the United Kingdom are trying and failing to come up with a deal on their future relationship before the December 31 deadline. On Wednesday, British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen had a marathon dinner in Brussels to try to salvage the Brexit negotiations. As von der Leyen put it in a statement, she and Johnson had a “lively and interesting discussion on the state of play. We gained a clear understanding of each other’s positions.
  • Meanwhile in the UK, economic recovery almost ground to a halt in October.

In early trade on Friday, the euro advanced against the US dollar to trade at $1.2158, while it has marginally weakened against the British pound to trade at GBP0.9129.