Vaccine rollout day 104 / J & J VACCINE DAY 97 [Phase 2]

By the close of trade on Friday, the South African rand weakened against the US dollar.  Eskom on Sunday evening reintroduced Load shedding, so prepare for a disruptive winter.

  • Despite global risk demand being aided by signs the US Fed would keep lending rates low despite rising inflation.
  • On the data front, in the US, retail sales unexpectedly stalled in April, as the boost from stimulus checks faded, but an acceleration is likely in the coming months amid record savings and a reopening economy.  Early Monday, the market sees the annualized figures of April month Retail Sales and Industrial Production from the National Bureau of Statistics of China at 02:00 GMT. Investors would emphasize more on the data considering the latest reflation chatters. Industrial Production (IP) and Retail Sales figures bear down forecasts of 9.8% and 24.9% on a YoY basis versus 14.1% and 34.2% respective priors. Further, Fixed Asset Investment is also likely to weaken from 25.6% previous readouts to 19% on a Year-To-Date (YTD) basis for the said month.
  • The University of Michigan’s index of consumer sentiment fell to the lowest reading since February, in May.
  • Business inventories increased moderately in March, likely restrained by shortages of raw materials, which have weighed on the production of motor vehicles and other goods.
  • The yield on benchmark government bonds mostly fell on Friday. The yield on 2026 bond fell to 7.38%. Further, the yield on 2023 bond advanced to 4.77%, while that for the longer-dated 2030 issue fell to 9.09%.

In early trade on Monday 17th May 2021, the US dollar is trading higher against the South African rand at R14.1526, while the euro is trading higher at R17.1772.  The British pound has gained against the South African rand to trade at R19.9326.

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

  • The economic growth outlook for the eurozone this year is unchanged from last month, which was the lowest expected rate since early in the COVID-19 pandemic.
  • The average asking price of homes coming on to the UK property market hit a high of a third of a million pounds in May, according to figures from the listings website Rightmove. The average asking price has increased by 1.8%, or £5,767, over the past month to £333,564, the website said, with an “unexpected mini-boom” that started last year continuing well into 2021. The property market has been buoyed by the stamp duty holiday, which was launched last summer and is being phased out in England and Northern Ireland in two stages starting at the end of June.
  • Japan’s wholesale prices rose in April at their fastest annual pace in six and a half years, data showed on Monday, a sign that rising energy and commodities costs were pinching corporate margins. With the COVID-19 pandemic weighing on domestic consumption, there is uncertainty about whether companies would pass on higher costs to households and help the central bank achieve its elusive 2% inflation target, analysts say. “The rise is driven mostly by solid global demand that is pushing up commodities prices,” said Shigeru Shimizu, head of the BOJ’s division in charge of price statistics.
  • There’s an unwritten rule in global bond markets: never short Germany. But when Europe’s safest asset is in the midst of a retreat that threatens to push yields on bunds above 0% for the first time in more than two years, a paradigm shift may be underway. Toronto-Dominion Bank was forced to close its recommendation for investors to buy German bonds last week, after yields climbed above their stop-loss level. NatWest Markets are calling for investors to sell bunds, hailing the end of the “super cycle” that has seen the securities rally for the best part of two decades. Goldman Sachs Group Inc. and ING Group NV are among banks who see yields rising to 0% by the end of the year.

In early trade on Monday, the euro has slipped against the US dollar to trade at $1.2162, while it has marginally gained against the British pound to trade at GBP0.8626.