Vaccine rollout day 18 / j&j DAY 2         

By the close of trade on Wednesday 17th February 2021, the South African rand strengthened against the US dollar boosted by demand for yields.

  • By unanimous vote, the Federal Reserve Committee voted to reaffirm without revision the Authorization for Domestic Open Market Operations, the Authorization for Foreign Currency Operations, and the Foreign Currency Directive, as shown below. The Guidelines for the Conduct of System Open Market Operations in Federal-Agency Issues remained suspended.
  • The dollar held ground on Thursday after its first back-to-back gains in two weeks as upbeat data bolstered expectations for the U.S. to recover from the pandemic faster than most of its peers. Bitcoin traded just shy of the new record high of $52,640 reached overnight, with its roughly 58% surge this month prompting some analysts to warn that the rally might be unsustainable. Stimulus cheques helped U.S. retail sales to rebound sharply in January, while industrial output and producer prices data also provided robust upside surprises.
  • Locally, the consumer price index (CPI) rose less-than-expected on a monthly basis in January and Retail sales fell on an annual basis in December.
  • In the US, the producer prices index (PPI) increased by the most since 2009 in January, as the cost of goods and services surged, suggesting inflation at the factory gate was starting to creep up.
  • Driven by stimulus and bailouts, and fired up by the tax cuts and by grease and pork, the Incredibly Spiking US National Debt has skyrocketed by $4.55 trillion in 12 months, to $27.86 trillion, after having already spiked by $1.4 trillion in the prior 12 months, which had been the Good Times. These trillions are all Treasury securities that form the US national debt, and someone had to buy every single one of these securities. A snap shot below provides a ranking of who bought the most:
    • UK (“City of London” financial center): $447 billion ($392 billion)
    • Ireland: $315 billion ($281 billion)
    • Luxembourg: $275 billion ($254 billion)
    • Brazil: $259 billion ($281 billion)
    • Switzerland: $255 billion ($237 billion)
    • Belgium: $247 billion ($207 billion)
    • Hong Kong: $230 billion ($250 billion)
    • Taiwan: $229 billion ($193 billion)
    • India: $210 billion ($162 billion)
    • Cayman Islands: $200 billion ($238 billion)
  • Global markets have been rattled in the last 24 hours after the yield on the benchmark U.S. 10-year Treasury note climbed above 1.3% for the first time since February 2020, while the 30-year bond also hit its highest level for a year. Yields move inversely to bond prices.  Yields tend to rise with inflation expectations as bond investors start to believe central banks will take their foot off the gas and reduce their asset purchases.
  • U.S. retail sales rebounded sharply in January after households received additional pandemic relief money from the government, suggesting a pick-up in economic activity after being restrained by a fresh wave of COVID-19 infections late last year. The surge in sales reported by the Commerce Department on Wednesday was across the board and ended three straight months of declines. Other data showed inflation pressures building up at the factory gate, with producer prices posting their biggest gain since 2009 in January. Retail sales surged by a seasonally adjusted 5.3% last month.
  • Minutes of the US Fed’s January policy meeting showed that officials debated how to lay the groundwork for the public to accept coming higher inflation, and also the need to “stay vigilant” for signs of stress in buoyant asset markets.
  • New York, after committing one of the “biggest blunders in banking history,” Citibank won’t be allowed to recover the almost half a billion dollars it accidentally wired to Revlon’s lenders, a US District Court judge ruled. Citibank, which was acting as Revlon’s loan agent, meant to send about $8 million in interest payments to the cosmetic company’s lenders. Instead, Citibank accidentally wired almost 100 times that amount, including $175 million to a hedge fund. In all, Citi (C) accidentally sent $900 million to Revlon’s lenders. Some lenders did return the money, but others did not.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.00%. The yield on 2023 bond advanced to 4.80%, while that for the longer-dated 2030 issue rose to 8.71%.

In early trade on Thursday, the US dollar is trading higher against the South African rand at R14.6822, while the euro is trading higher at R17.6822.  The British pound has gained against the South African rand to trade at R20.3367.

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

  • China’s rare-earth exports to the US are not being restricted and are continuing unaffected, but reviews of such an option may have been done and measures could be taken against foreign companies that hurt China’s interests, when necessary, experts and industry sources said. Western media reports claimed that China is imposing export controls on rare-earth minerals that are crucial for the production of the US F-35 fighter jets and other advanced weaponry.
  • In the UK, inflation edged up in January as consumers kneeled down with new sofas and duvets and spent more on food, video games and other home entertainment as they went into a third national coronavirus lockdown.
  • About 2.6 million people in the U.K., or 8% of workers, expect to lose their jobs in the next three months, according to a survey that suggests long-lasting damage to the economy from the coronavirus. The figures include people who have already been told that they will be made redundant, with young people and the lowest earners at greatest risk, the Resolution Foundation said Wednesday. The analysis found about 2 million people had been unemployed or on furlough for the past six months, a length of time that leaves them at higher risk.

In early trade on Thursday, the euro has marginally slipped against the US dollar to trade at $1.2072, while it has gained against the British pound to trade at GBP0.8722.