Vaccine rollout day 87 / J & J VACCINE DAY 75

By the close of trade on Thursday 29th April 2021, the South African rand weakened against the US dollar.

  • In the US, 1Q GDP growth came in at 6.4% annualized, a little weaker than we had been looking for (7.4%) and just a touch softer than the 6.7% consensus. Consumer spending rose 10.7%, which was actually above what we had been factoring in, while non-residential fixed investment rose 9.9% and residential investment posted a 10.8% increase with government spending up 6.3%. However, a run down in inventories subtracted a hefty 2.6 percentage points from GDP growth and net exports subtracted 0.9 percentage points as strong consumer demand sucked in imports while exports fell due to economic weakness overseas.
  • When the Chinese government hiked tariffs on Australian wine last year, it effectively tripled prices and all but decimated a $1.1 billion export market. At the time it was but the latest front of a rapidly expanding trade offensive, that has come to threaten exports from barley and lobsters to timber, tourism, and even Australian coal. Now Australia looks like it’s going to get an independent third party to review whether China’s justifications for doing it stack up.
  • The yield on benchmark government bonds rose yesterday. The yield on 2026 bond rose to 7.33%. Further, the yield on 2023 bond advanced to 4.70%, while that for the longer-dated 2030 issue rose to 9.24%.

In early trade on the last day of the month, the US dollar is trading lower against the South African rand at R14.3264, while the euro is trading lower at R17.3322.   The British pound has marginally declined against the South African rand to trade at R19.9566.

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

  • President Emmanuel Macron said restrictions on businesses and a nationwide curfew will be relaxed from May 19 as he outlines steps to reopen France amid an accelerating vaccination campaign. With his job on the line in elections in just a year, Macron is under pressure to ease curbs. Yet while that will bring some relief to a pandemic-weary country, it’s also a gamble. Hospitals remain under intense strain and France is still trailing the U.K. and Germany in the number of vaccine doses administered.
  • The European Commission’s economic sentiment indicator surged to 110.3 points in April from 100.9 in March, dwarfing the consensus forecast of 102.2. In two months’ time sentiment has gained 16.9 points, now firmly standing above its long-term average. Amongst the bigger member states, all countries saw higher sentiment figures, with the Netherlands gaining 10.7 points, Spain 9.1, France 8.5, Germany 5.7 and Italy 5.3. Strength across the board: Industrial confidence is now at a record high, while sentiment in the service sector surprised with an 11.7 point jump.
  • Australia’s CPI result for Q1 was contrary to the hawkish inflation expectations being seen globally. Anticipated to rise around 1.0% by both the market and Westpac, headline prices instead gained 0.6%. Trimmed mean core inflation also disappointed, coming in at just 0.3%. On an annual basis, both headline and trimmed mean core inflation is 1.1%yr. Government assistance for housing such as the Federal Government’s Home Builder scheme clearly contributed to Q1’s downside surprise.
  • Tokyo consumer prices fell unexpectedly in April due to cuts in mobile phone fees by major carriers, government data showed on Friday, making the central bank’s 2% inflation target appear even more elusive. Major carriers have come under intense pressure from Prime Minister Yoshihide Suga, who has called for mobile phone fees to drop by as much as 40%, arguing that Japan’s cellphone fees, among the world’s most expensive, were straining households. While lower cellphone fees may help boost household income and stimulate consumption, they are also exerting downward pressure on prices
  • German unemployment rose unexpectedly in April and companies put more staff on shorter working hours in subsidized job protection schemes. Germany’s annual consumer price index (CPI) accelerated in April, advancing further above the European Central Bank’s target of close to but below 2%.

In early trade on Friday 30th April 2021, the euro marginally slipped against the US dollar to trade at $1.2132, while it has marginally weakened against the British pound to trade at GBP0.8720.