Vaccine rollout day 156 

New cases 22910

Single day deaths 460

By the close of trade on Thursday 8th July 2021, the South African rand weakened against the US dollar. Former president Jacob Zuma is settling in to his second day at the Escourt prison facility with the word from the Correctional Services being that Zuma will be treated as an ordinary citizen.  Microsoft making headlines as the Gauteng Government erroneously pays a R20m account in Dollars.  The oversight was corrected but not before the FX movement resulted in a near R7m loss.

  • In the US, the number of people filing new claims for unemployment benefits rose slightly for the week ended 2 July, however, continuing claims dropped, indicating that the domestic labour market’s recovery from the COVID-19 pandemic continued to be choppy.
  • While stocks have been a (mostly) one-way ticket higher, 2021 has been a rollercoaster for interest rates: after 10 year yields rose +83bps in Q1, they fell -27bps in Q2 and have started Q3 by already falling another -12bps.  The American consumer is making a triumphal return. After several months of subdued increases in consumer credit, moments ago the Fed reported that in May, total consumer credit surged by the most on record, soaring by $35.28 billion, nearly double the consensus estimate of $18 billion and sharply higher from last months’ $20.04 billion. The monthly increase was a whopping 10% SAAR, pushing the total to a new record high of $4.279 trillion.
  • Senate Banking Committee Chair Sherrod Brown said he expects Federal Reserve Vice Chair Randal Quarles’s oversight of the central bank’s financial supervision to end with the conclusion of his term in October.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.45%. Further, the yield on 2023 bond declined to 5.18%, while that for the longer-dated 2030 issue fell to 8.88%.

In early trade on Friday 9th July 2021, the US dollar is trading marginally higher against the South African rand at R14.3452, while the euro is trading marginally lower at R16.9867.   The British pound has declined against the South African rand to trade at R19.7566.

By the close of trade on Thursday 8th July 2021, the euro advanced against most of the major currencies.

  • Meanwhile, German trade surplus narrowed in May, as imports rose more than exports during the period.
  • The European Central Bank (ECB) set a new inflation target at 2.0% in the medium term, abandoning a previous formulation of “below but close to 2.0%”. ECB President, Christine Lagarde has driven an 18-month deep dive into the inner workings of the bank, challenging even core principles of central banking in the hopes of resetting strategy and bolstering credibility.  The ECB added that when the economy is operating close to the lower bound on nominal interest rates, it requires especially forceful or persistent monetary policy action to avoid negative deviations from the inflation target becoming entrenched. This may also imply a transitory period in which inflation is moderately above target.  Core bond yields have been falling quite a lot in the past few days, and financial markets are not pricing in any major shifts in the ECB’s monetary policy setup. The risk of the first ECB rate hike increases in 2023, but short rates are priced to remain below zero still in 2026. It is hard to argue that today’s message would support further moves towards lower yields, but the near-term direction continues to point down.

In early trade on Friday 09th July 2021, the euro slipped against the US dollar to trade at $1.1872, while it has marginally gained against the British pound to trade at GBP0.8466.

Carl Niehaus, spokesperson of the disbanded uMkhonto weSizwe Military Veterans Association (MKMVA), was arrested on Thursday outside the Estcourt Correctional Centre in KwaZulu-Natal for contravening lockdown regulations.  The correctional facility is where former president Jacob Zuma is jailed.  Localised demonstrations across tolls and National roads seem to be flaring up and the writer urges everyone to be vigilant when travelling.

Have a safe weekend.