Vaccine rollout day 12

By the close of trade on Wednesday 12th February 2021, the South African rand weakened against the US dollar.

  • President Joseph R. Biden, Jr. spoke today with President Xi Jinping of China. The President shared his greetings and well wishes with the Chinese people on the occasion of Lunar New Year. President Biden affirmed his priorities of protecting the American people’s security, prosperity, health, and way of life, and preserving a free and open Indo-Pacific. President Biden underscored his fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan. The two leaders also exchanged views on countering the COVID-19 pandemic, and the shared challenges of global health security, climate change, and preventing weapons proliferation.
  • In the US, consumer price index (CPI) rose moderately in January. However, underlying inflation remained benign as the pandemic continues to be a drag on the domestic labour market and services industry.  Higher oil prices will lead to further rises in gas prices, which will show up in the overall CPI. However this should be limited, especially if we start to see dividends from investments in clean technology. A jump in gas prices pushes the overall CPI up 0.3 percent in January; the core index is flat. Overall and core CPI are both up 1.4 percent year-over-year. Rent and owners’ equivalent rent are both up just 0.1 percent in January; year-over-year they are up 1.6 percent and 2.0 percent, respectively. Rental inflation has slowed sharply, especially in high-priced metro areas.
  • Wholesale inventories increased more than initially thought in December, even though sales accelerated.
  • Dovish comments from Fed Chairman Jerome Powell, with stocks hitting record highs, the Biden Administration making progress on finalizing the stimulus deal and more Americans getting vaccinated, some Fed Presidents have been talking about earlier tapering. However Powell casted doubt on this scenario by saying that they will not tighten policy in response to strong labor data because a strong labor market is still very far away..
  • The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 6.68%. Further, the yield on 2023 bond advanced to 4.66%, while that for the longer-dated 2030 issue fell to 8.54%.

In early trade on Thursday, the US dollar is trading lower against the South African rand at R14.7422, while the euro is trading lower at R17.8667.  The British pound has marginally declined against the South African rand to trade at R20.4122.

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

  • Back at home all eyes turn towards the SONA.  Locally SA Business Confidence for January came in higher at 94.5 versus 94.3 previously while in the US, inflation released yesterday showed a moderate gain of 1.4% versus the 1.5% expected.  This year there will be no EFF present in the chamber and the SONA takes on a “virtual” delivery.  Proceedings will be preceded by a candle lighting ceremony [ESKOM load shedding springs to mind].
  • German CPI rose in line with market expectations on a monthly basis in January.
  • Poland’s central bank moved to resolve the biggest threat to the country’s financial industry, offering commercial lenders help in converting $30 billion of Swiss-franc loans into zloty. The banks asked the monetary authority to step in after a multitude of lawsuits over the loans forced them into mounting provisions. It’s unclear, though, how many will be willing or able to meet the stiff conditions that include halting dividends and bonuses, and reducing leverage.

In early trade on Thursday, the euro has marginally advanced against the US dollar to trade at $1.2166, while it has weakened against the British pound to trade at GBP0.8723.