LOCKDOWN LEVEL 1 Ver3 [ DAY 22]  

TOTAL DAYS 391 – 7 HOURS 35 MINUTES

Vaccine rollout day 78 / J & J VACCINE DAY 66 [SUSPENDED DAY 8]

By the close of trade on Tuesday 20th April 2021, the South African rand weakened against the US dollar.    Paying extra for additional legroom is one of the more infuriating aspects of air travel. Even more infuriating? Being asked to pay almost $800 million for it. Australian comedian Dave O’Neil, who later described himself as a “big man,” was flying for the first time since the pandemic hit Australia in March last year. But after deciding to book a seat on Qantas with extra legroom for his flight to Perth, he was amused to see the price pop up: $987,999,999 in Australian dollars, which works out to a little more than USD$770 million. Like any comedian presented with readymade joke material, he tweeted about it.

  • Toronto health authorities will order workplaces across Canada’s biggest city to close if they have more than five confirmed cases of Covid-19. The decision Tuesday overrides less stringent provincial orders, and follows a similar move by Peel Region, a western suburb. It comes as the city struggles to contain a surge in variant cases that threatens to collapse the local health-care system. Workplaces, or portions of workplaces, will be required to close for at least 10 calendar days if five or more confirmed cases of Covid-19 have been identified in a two-week period.
  • Companies are freaking out about soaring prices (as we will shows shortly), lumber has risen for 17 consecutive days, and crippled supply chains have pushed commodity and input costs (for those items that can still be found) to levels not seen in years, but all of this is news to Jerome Powell. In an April 8 letter from the Fed Chair to Senator Rick Scott, Powell said the overheating U.S. economy is going to temporarily see “a little higher” inflation this year as supply constraints push up prices in some sectors, but fear not – the Federal Reserve is committed to keeping any overshoot within limits.
  • Diplomats negotiating the revival of the Iran nuclear deal in Vienna today gave the strongest indications to date that Washington and Tehran are ready to set aside maximalist demands and work toward the eventual lifting of US sanctions that have crippled Iran’s oil exports. The joint commission that oversees the nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), has “decided to create a third expert group to start looking into the possible sequencing of respective measures,” said the EU External Action Service’s Enrique Mora, who is coordinating the meeting.
  • A suicide bombing targeted Afghan security forces Tuesday in an attack that comes shortly after the U.S. announced its plan to withdraw from Afghanistan. Security officials told Reuters that the bombing targeted a convoy in Kabul, but no casualties were immediately reported. Afghan Interior Ministry spokesman Tariq Arian confirmed on Twitter that an explosion occurred in the area but provided no further details. The bombing is the first major attack to hit Afghanistan since President Biden last week laid out his plan to withdraw U.S. troops from the country.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.19%. Further, the yield on 2023 bond declined to 4.89% while that for the longer-dated 2030 issue rose to 9.07%.

In early trade on Wednesday, the US dollar is trading marginally higher against the South African rand at R14.3122, while the euro is trading marginally higher at R17.2267.   The British pound has marginally declined against the South African rand to trade at R19.9426.

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

  • A European Central Bank lending survey showed that the eurozone banks expect to tighten access to credit further in the second quarter. It added that loan demand was also waning as firms were postponing investments while many were living off either liquidity buffers or direct government liquidity support.
  • The latest reading of Germany’s manufacturing PMI at 66.6 in March exceeded the previous all-time high in the 25-year history of the series by more than three points, merchandise exports have come close to pre-pandemic levels in February, and manufacturing orders have been recovering with almost no interruption since May 2020 and are now at their highest levels since December 2018. At the same time, service-sector PMI, which had enjoyed a brief phase of (above-50) expansionary readings in Q3 2020 before dropping back into contraction territory thereafter, only managed to edge modestly above 50 in March.
  • Western EU banks’ 2Q21 results will start to reveal the true extent of asset quality deterioration due to the pandemic, Fitch Ratings says in a new report. So far this has been masked by loan moratoria but a clearer picture should start to emerge now that most have expired. Fitch nevertheless expects loan impairment charges from loan moratoria to fall within the baseline estimates communicated in our 2021 outlook for western European banks. Outstanding moratoria in major western EU economies comprised just 3.5% of loans to households and non-financial corporates at end-2020, down from 6% at end-3Q20.

In early trade on Wednesday, the euro marginally slipped against the US dollar to trade at $1.2062, while it has marginally gained against the British pound to trade at GBP0.8678.