LOCKDOWN LEVEL 3 Ver 2 [ DAY 2]  

TOTAL DAYS 456 – 7 HOURS 30 MINUTES

Vaccine rollout day 142 / J & J VACCINE DAY 130 [Phase 2]

New cases 16,078

By the close of trade on Thursday 24th June 2021 the Rand had strengthened against the US Dollar.   COVID-19 infections continued to increase at an alarming rate, with Gauteng, the country’s economic hub, the worst affected amid reports of shortages of hospital beds and oxygen. People being turned away whilst there has been a negligible increase in vaccine count.

  • John McAfee, the creator of the McAfee antivirus software company who has made headlines many times in the last decade for his legal troubles and presidential runs, was found dead in a jail cell in Spain late Wednesday, hours after a court approved his extradition to the United States on tax evasion charges. The 75-year-old McAfee was found dead in the Brians 2 prison near Barcelona on Wednesday, as the Associated Press reports via the Spanish newspaper El País. Spain’s National Court had approved McAfee’s extradition to the U.S. earlier in the day, and McAfee faced a possible 30-year sentence for tax evasion.
  • A Ukrainian national was sentenced today in the Western District of Washington to seven years in prison for his role in the criminal work of the hacking group FIN7. The defendant was also ordered by the court to pay restitution in the amount of $2,500,000. According to documents filed in the case, statements made at the sentencing, and public documents, Andrii Kolpakov, 33, who has used a number of different names, served as a high-level hacker, whom the group referred to as a “pen tester,” for FIN7. He was arrested in Lepe, Spain, on June 28, 2018, at the request of U.S. law enforcement and was extradited to the US to stand trial.
  • After two disappointing auctions earlier this week when both the 2Y and 5Y sales tailed to subpar investor demand, moments ago we got the last coupon auction of the week when the Treasury sold $62BN in 7Y paper. And while there were some fears that the auction would suffer even worse demand, if nowhere near as bad as the catastrophic 7Y auction in late February which sparked weeks of market turmoil, the demand for today’s offering was actually stellar. The auction priced at a high yield of 1.264%, stopping through the When Issued 1.267% by 0.3bps and lower compared to last month’s 7Y auction yield of 1.285%. In fact it was the lowest 7Y yield since February’s 1.195%.
  • US President Biden says agreement has been reached on the infrastructure agreement which will result in the creation of millions of jobs in the United States. Expenditures will bring long overdue investments.
  • More details about the DoJ investigation into the collapse of Archegos are starting to emerge. Instead of going after Archegos and its founder, ex-billionaire “Tiger cub” Bill Hwang, it looks like the investigation is focusing on the prime brokers that extended his fund the margin it used to magnify the size of his bets on a handful of media and tech stocks, including ViacomCBS.  According to Bloomberg, the DoJ’s antitrust division is handling at least part of the criminal investigation into the collapse. Specifically, it appears they’re interested in the banks’ discussions about potentially working together to unwind pieces of the Archegos portfolio in an orderly fashion that wouldn’t spook markets.
  • Every few quarters, the repurchase (repo) market seems to experience a new event, with the ensuing headlines fostering a renewed awareness of the importance of this keystone of our financial system. Functionally simple, a repo is a collateralized transaction whereby monies are exchanged, with cash on one side and securities – typically bonds or equities – on the other. Although repurchase agreements are an important source of cash for short-term borrowers and lenders, the repo market has also become an oft-overlooked source of risk, as well as an untimely scapegoat of market volatility over the past few decades.  The global financial crisis of 2008 provided investors with many lessons. Among them was the fragility of our financial system when repo trades were a primary source of structural leverage for many institutional market participants. Concerns were again raised in September 2019 when the “great repo blowup” occurred with overnight funding levels reaching more than 10% annualized, only to have the U.S. Federal Reserve (Fed) step in and use repo operations as a salve for irritated market conditions. Subsequently, in March 2020, the early stages of the COVID-19 pandemic ushered in the “great pullback” of financing, with banks and repo desks hoarding cash, rather than deploying it into the marketplace.
  • The Kansas City Fed’s monthly survey of manufacturing activity ticked up in June, driven by demand for durable goods. Durable goods order rebounded in May, lifted by a rise in orders for transportation equipment. On the contrary, goods trade deficit widened more than forecasts in May.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.30%. Further, the yield on 2023 bond declined to 5.16%, while that for the longer-dated 2030 issue fell to 8.89%.

In early trade, the US dollar is trading lower against the South African rand at R14.1872, while the euro is trading lower at R16.9384.   The British pound has declined against the South African rand to trade at R19.7626.

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

  • German business morale rose by more than expected in June and hit its highest level since November 2018.
  • In the UK, BoE kept its key interest rate and the GBP20.00bn corporate bond programme unchanged. It indicated that inflation would surpass 3.0%, as the UK’s locked-down economy reopens. The upward trajectory of consumer confidence remained steady in June amid warnings the threat of inflation could quickly weaken stability. GfK’s long-running consumer confidence index stayed at minus nine this month despite a six-point drop in the measure for the wider economy in the coming year amid forecasts for rising retail price inflation. However, confidence in personal finances, both for the last 12 months and the year ahead, remain strong, up four points and one point respectively on last month.
  • Tokyo consumer prices were flat in June, halting a 10-month slide even as business restrictions remained in place to contain the coronavirus. Prices in the capital excluding fresh food were unchanged from a year earlier, the ministry of internal affairs reported Friday. Analysts had forecast a 0.1% drop. Key Insights The data add to signs that downward pressures on Japan’s overall prices are moderating as commodity and energy costs rebound from last year’s pandemic crash. Gasoline prices are even more important to national price trends because people outside the capital tend to drive more.
  • Rising world food prices for producers are making headlines and causing concerns among the public. The most recent data show a moderation in consumer food price inflation globally, but as we explain below, that could change in the coming months. This would only add to the high prices that consumers in many countries already lived through last year.  If prices eventually rise again, there will likely be sizeable differences between countries. Due to various factors, it is probable that the effect would be felt most by consumers in emerging markets and developing economies still wrestling with the effects of the pandemic.  Emerging markets and low-income countries are also more vulnerable to food price shocks because consumers in these countries typically spend a relatively large proportion of their income on food. Finally, for emerging markets and developing economies an additional risk factor is the currency depreciation against the US dollar possibly due to falling export and tourism revenues and net capital outflows. Since most food commodities are traded in US dollars, countries with weaker currencies have seen their food import bill increase.

In early trade on Friday 25th June 2021, the euro advanced against the US dollar to trade at $1.1942, while it has marginally gained against the British pound to trade at GBP0.8582.