Vaccine rollout day 17          

By the close of trade on Monday 15th February 2021, the South African rand strengthened against the US dollar.

  • A drop in new coronavirus infections in many countries across the world boosted emerging-market assets.
  • Locally the ANC is facing it’s own demons as Former President Zuma faces jail time or a fine for snubbing the Zondo Commission.  The commission chair Deputy Chief Justice Raymond Zondo has said the commission will push for Jailtime.  Added to this crisis is the party nr 3 Ace Magashule who is headed to the Bloemfontein court this Friday for corruption.  The ANC policy of step aside until you are pronounced guilty is under fire.  In the US former president Donald Trump survived his second impeachment trial as the voting process came up short at 57 – 43 in favor of impeachment.  Seven republican senators voted in favor of the impeachment succeeding.  President Biden will now look to the Senate getting on with the business of the day and first up some key confirmations, notably the Attorney General.
  • Temperatures in Houston fell to as low as -11C on Monday, with an inability to keep up with energy demand prompting rolling blackouts, production in parts of the shale oil basin in Texas curtailed and now the biggest US oil refinery, in Port Arthur (Texas not Tassie) shut down. News of the Arctic snap saw crude oil futures up +/ – 2% during our time zone yesterday, WTI rising above $60 for the first time since January 2020 and Brent pushing above $63. At the start of this month WTI was trading around $52 and Brent $56, gains since then and prior to yesterday supported by anticipation of stronger demand.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 6.77%. Further, the yield on 2023 bond advanced to 4.70%, while that for the longer-dated 2030 issue rose to 8.54%.

In early trade on Tuesday, the US dollar is trading lower against the South African rand at R14.4234, while the euro is trading lower at R17.5166.  The British pound has gained against the South African rand to trade at R20.1125.

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

  • New Italian Prime Minister Mario Draghi is already transforming the political scene in Rome and causing stock markets to surge. In the wake of fresh political chaos, the former European Central Bank president was called upon to become Italy’s new leader and rescue its turbulent economy. His arrival has been described as “better than expected” after gathering widespread political support and stemming the threat of populist forces. Draghi, who was sworn in on Saturday, presented his Cabinet over the weekend — a group made up mostly of politicians from different parties and some technocrats in key ministries.
  • Perhaps looking to be lighthearted, or perhaps just looking for something to do in between printing more money, the ECB took to their Twitter account on Valentine’s Day to Tweet out a love poem about monetary policy. While some would just write this off as a bit of PR or some good-natured spin in order to acknowledge the holiday, the Tweet instead backfired in a big way. It prompted over 2,000 responses, many of which seemed to be critical not just of the ECB’s attempt at making a joke, but also at their larger ongoing failure of monetary policy as a whole.
  • The UK will release inflation and retail data this week, and unsurprisingly with the country stuck in lockdown, both are likely to be relatively depressed. Headline CPI will remain heavily constrained by energy prices, while more timely spending data points to a post-Christmas 4% fall in retail sales. But with reflation becoming a key theme in financial markets, it’s a good time to ask, will the UK see price pressures re-emerge as the country reopens? Strictly speaking, yes. Headline inflation is likely to be back to 2% by the end of 2021, though unsurprisingly a lot of that is down to energy.
  • The eurozone industrial production fell more-than-expected on a monthly basis in December and the trading bloc’s trade surplus widened in December.
  • Japan’s GDP (growth domestic product) surprised to the upside in Q4 on Monday, rising 12.7% versus 9.5% forecast, up from 22.9% prior. This also saw the annualised rate rise to 3% compared with 2.3% forecast, although down from 5.3% in Q3. Strong exports and a rebound in capital expenditure were the main divers behind the positive headline figures. It also means Japan are the latest Asian country to perform better than expected during their recovery, following Singapore and Thailand’s upside GDP surprises.

In early trade on Tuesday, the euro advanced against the US dollar to trade at $1.2232, while it has weakened against the British pound to trade at GBP0.8766.