Vaccine rollout day 152 

New cases 16 585

By the close of trade on Friday 1st July 2021, the South African rand strengthened against the US dollar. Over the weekend the Zuma show played out with the Apex court granting Zuma a last minute reprieve to appear before it to make submissions.  This forced a stay in respect of Zuma handing himself over but did not stop thousands heading to Nkandla to show support.  This “Super Spreader” event was allowed to continue unchecked by SA Police who following Marikana had no appetite to enforce any transgression of the NCCC restrictions on gatherings or political rallies.  This week Zuma faces off in the PMB High court before heading to the APEX court the following Tuesday.

  • In the US, non-farm payrolls reported a robust growth, with companies offering incentives and raised wages to attract unemployed labour force, in order to increase their production and services to meet the growing demand.
  • Factory orders boosted on a monthly basis in May with increased spending on equipment despite supply constraints. On the contrary, the US trade deficit widened in May to the second largest on record as imports increased faster than exports.
  • Short-term rates traders are girding for a bumpy road ahead, as the U.S. debt ceiling looks poised to return on Aug. 1 while Congress so far has no clear plan to increase it meaning federal government borrowing could soon get tricky. Toward the top of the list of worries among traders: the U.S. is likely to reduce issuance of bills which are already in short supply as investors scramble for places to park cash because the Treasury Department needs to dramatically reduce its cash balance this month. The debt ceiling was suspended for two years in July 2019.
  • June survey data signalled a slowdown in Chinese service sector growth, as an uptick in COVID-19 cases and reduced travel dampened demand. Notably, both business activity and new orders rose at the slowest rates for 14 months. At the same time, there were signs of reduced pressure on capacity and business confidence softened, which led to a slight fall in employment. On the prices front, operating expenses rose only slightly in June, while prices charged fell for the first time since July 2020. The headline seasonally adjusted Business Activity Index posted 50.3 in June, down from 55.1 in May.
  • Saudi Arabia insisted on Sunday night that OPEC+ must extend its production agreement to the end of next year, sticking to a plan that has met with strong opposition from the United Arab Emirates. “We have to extend,” Saudi Energy Minister Prince Abdulaziz bin Salman In an indication of the seriousness of the diplomatic standoff, implied that Abu Dhabi was isolated within the OPEC+ alliance. “It’s the whole group versus one country. I’m sad but that’s the reality of the day,” he said.
  • The yield on benchmark government bonds mostly fell on Friday. The yield on 2026 bond fell to 7.52%. Further, the yield on 2023 bond advanced to 5.33%, while that for the longer-dated 2030 issue fell to 8.92%.

In early trade on Monday 05th July 2021, the US dollar is trading marginally lower against the South African rand at R14.2527, while the euro is trading lower at R16.8966.  The British pound has declined against the South African rand to trade at R19.6736.

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

  • The European Central Bank (ECB) President, Christine Lagarde stated that the economy is recovering from the pandemic effect, but this recovery is fragile.
  • The eurozone’s producer price index (PPI) rose more than expected in May both on an annual and monthly basis.
  • Australia’s central bank is likely to gently rein in some of its emergency stimulus to reflect the economy’s powerful recovery, even with almost half the nation back in lockdown due to an outbreak of the delta variant of Covid-19. The Reserve Bank is expected to decide against rolling over its three-year yield target to the November 2024 bond from the current April 2024 at Tuesday’s meeting, an extension that would imply interest rates won’t go up until 2025. The central bank will also maintain its quantitative easing program but likely in a revised form.

In early trade on Monday 5th July 2021, the euro slipped against the US dollar to trade at $1.1872, while it has weakened against the British pound to trade at GBP0.8566.