Vaccine rollout day 111 / J & J VACCINE DAY 104 [Phase 2]

By the close of trade on Friday, the South African rand strengthened against the US dollar.  In SA the ESKOM files spew up more evidence of corruption and overspend on the Kusile Power Station.  The SIU is now investigating a payment of R302m paid to a sub contractor for “community Liaison”.

  • Better-than-expected economic data from the eurozone boosted optimism surrounding the global economic outlook. The services sector on both sides of the Atlantic came roaring back in April with the Services PMIs hitting all-time highs in the US and in the Eurozone was at its highest level since 2018. There was little reaction to the data with a more favorable outlook already well priced. Equities were little moved with the S&P500 -0.1%, to end the week down -0.4%. US yields were also little moved on both the day and the week with the 10yr at 1.62%. Looking at breakeven’s and real yields though reveals an interesting dynamic over the past week with 10yr implied inflation breakeven’s down -9.6bps to 2.45% and 10yr real yields up.
  • In the US, factory activity gathered speed in early May, amid strong domestic demand, but backlogs of uncompleted work are piling up as manufacturers struggle to find raw materials and labour, boosting costs for both businesses and consumers.
  • Belarusian authorities detained a journalist aboard a Ryanair flight from Athens to Vilnius that was forced to land in Minsk. Raman Pratasevich, the former editor-in-chief of the most popular Telegram news channel in Belarus, was arrested in the Minsk airport after the plane landed, according to the Minsk-based human rights center Viasna, which is not officially registered by the country’s authorities.
  • Hospitals in Japan’s second largest city of Osaka are buckling under a huge wave of new coronavirus infections, running out of beds and ventilators as exhausted doctors warn of a “system collapse”, and advise against holding the Olympics this summer. Japan’s western region home to 9 million people is suffering the brunt of the fourth wave of the pandemic, accounting for a third of the nation’s death toll in May, although it constitutes just 7% of its population. The speed at which Osaka’s healthcare system was overwhelmed underscores the challenges of hosting a major global sports event in two months’ time
  • The yield on benchmark government bonds mostly fell on Friday. The yield on 2026 bond fell to 7.29%. Further, the yield on 2023 bond advanced to 4.85%, while that for the longer-dated 2030 issue fell to 8.97%.

In early trade on Monday 24th May 2021, the US dollar is trading marginally higher against the South African rand at R13.9657, while the euro is trading higher at R17.0068.  the British pound has marginally declined against the South African rand to trade at R19.7652.

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

  • The German services activity rose by the most in nearly a year in May, helped by a loosening of COVID-19 restrictions, while supply bottlenecks in the manufacturing sector led to production problems at a growing number of factories.
  • The eurozone’s business growth accelerated at its fastest pace in over three years in May.
  • The German Bundesbank monthly report indicated that inflation could climb as high as 4.0% this year, a rate not seen since the euro was introduced more than two decades ago. It also stated that rapid progress in Germany’s Covid-19 vaccination campaign could lead to a considerable loosening of restrictions in the coming months, allowing the economy to grow strongly in the third quarter and exceed its pre-crisis level as early as the fourth.

In early trade on Monday, the euro has marginally slipped against the US dollar to trade at $1.2186, while it has gained against the British pound to trade at GBP0.8622.