LOCKDOWN LEVEL 1 Ver3 [ DAY 15]
TOTAL DAYS 384 – 7 HOURS 35 MINUTES
Vaccine rollout day 71 / J & J VACCINE DAY 59 [SUSPENDED DAY 1]
By the close of trade on Tuesday 13th April 2021, the South African rand strengthened against the US dollar. In South Africa confusion abounds as the Health Minister announced that the J&J vaccine had been placed on hold. South Africa has up to now only administered 292 263 vaccines with no public announcement on vaccine registrations or program forthcoming. This announcement followed on the heels of the US suspending J&J vaccines after 6 people had died after taking the vaccine.
- In SA data released in mining, showed that production was better than expected in February, posting a first annual gain in a year as double-digit increases in the output of iron and manganese ore, as well as other non-metallic minerals, boosted the mining sector.
- In the US, the consumer price index (CPI) rose by the most in more than 8-1/2 years in March as increased vaccinations and massive fiscal stimulus unleashed pent-up demand, kicking off what most economists expect will be a brief period of higher inflation. A gauge of global equity markets rose to record highs on Tuesday, led by surging technology-related stocks, as Treasury bond yields eased after U.S. consumer price data for March showed the pace of inflation was not rising wildly. The consumer price index rose 0.6%, the biggest increase since August 2012, as rising vaccinations and fiscal stimulus unleashed pent-up demand. But the data is unlikely to change Federal Reserve Chair Jerome Powell’s view that higher inflation in coming months will be transitory.
- The pace of consumer inflation is likely to have returned to pre-pandemic levels in March, and it is expected to heat up even more in the next couple of months. Rising inflation is one of the biggest fears in the market, and if it gets too hot, it could corrode asset values, limit buying power and eat away at corporate margins.
- Airport traffic is rebounding off of pandemic troughs in most countries, though Fitch Ratings’ latest quarterly Global Airport Tracker report says the proverbial runway to normal will not be in sight for years. Now reflecting a one- to two-year delay since its last report, Fitch now forecasts recovery estimates ranging anywhere from 4Q’23 to 2025 before airport traffic returns to 2019 levels. The obvious variable is new COVID-19 variants and surges in the number of cases, which caused additional or prolonged lockdown measures and could linger as vaccine roll outs remain slow and uneven on a global basis.
- Billionaires like Bill Gates have long said that they, theoretically, would be in favor of paying much more money in personal taxes. And yet Gates and some of the wealthiest people in the world are staying silent on a series of active proposals that would do just that, sidestepping a legislative package in their home state of Washington that targets them specifically. Washington is home to four of the richest people on the planet: Gates, Amazon founder Jeff Bezos, Bezos’s ex-wife novelist MacKenzie Scott, and longtime Microsoft CEO Steve Ballmer.
- China is taking more direct steps to mend relations with U.S. investors, ramping up its communication with businesses in an environment of heightened economic tensions between the two nations. Officials from the National Development and Reform Commission, the government’s top economic planning body, met Tuesday with representatives of companies like Tesla Inc., Qualcomm Inc. and Dell Technologies Inc. the first of possibly more similar meetings planned with U.S. firms.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.46%. Further, the yield on 2023 bond declined to 5.12% while that for the longer-dated 2030 issue rose to 9.34%.
In early trade on Wednesday, the US dollar is trading lower against the South African rand at R14.4954, while the euro is trading lower at R17.3732. The British pound has marginally declined against the South African rand to trade at R19.9572.
By the close of trade on Tuesday, the euro advanced against most of the major currencies.
- Investor sentiment in Germany fell unexpectedly in April, citing rising fears that private consumption could be depressed as Europe’s largest economy gets closer to extending lockdown measures.
- In the UK, Gross Domestic Product (GDP) rose less than expected on a monthly basis in February, showing a partial recovery in post-Brexit trade with the European Union.
- Japan’s core machinery orders unexpectedly fell the most in about a year in February, government data showed, dashing hopes for a pick-up in capital expenditure needed for a private sector-led recovery from the coronavirus-induced slump. Policymakers are counting on companies to spend their huge cash piles on investment in plant and equipment and wage hikes to help pull the world’s third-largest economy out of deflation and stagnation.
In early trade on Wednesday, the euro has advanced against the US dollar to trade at $1.1972, while it has marginally gained against the British pound to trade at GBP0.8722.
LOCKDOWN ADJUSTED LEVEL 3 Ver1 [ DAY 20]
Wave 2 NEW VARIANT
TOTAL DAYS 300 – 07 HOURS 35 MINUTES
By the close of trade on Tuesday, the South African rand strengthened against the US dollar.
- It’s a big week for the financial markets. On Tuesday the Congressional hearings for Janet Yellen’s confirmation as Treasury secretary began (there’s no guidance on how fast the panel will vote on her nomination) and today [Wednesday 20th January 2021], Joe Biden will be sworn in as the 46th President of the United States. This is only the second time in US history that the outgoing President and his family will not attend thew inauguration. There are 3 central bank monetary policy announcements, PMI reports from countries around the world and Australia’s labor market report. With less than 8 hours to go before Trump leaves office, investors are optimistic. The rally in equities and currencies shows little concern about violence and punishing policies. South of Americas borders the Caravans have been temporarily halted after violent clashes with local Government forces. Biden has stated in his election campaign that under his administration he will welcome 11 million new Americans.
- Meanwhile Janet Yellen, President-elect Joe Biden’s choice for Treasury secretary, testified Tuesday that the U.S. could afford a higher corporate tax rate if it coordinates with other economies around the globe. “We look forward to actively working with other countries through the [Organization for Economic Cooperation and Development] negotiations on taxes on multinational corporations to try to stop what has been a destructive, global race to the bottom on corporate taxation,” she said in response to a question from Sen. Mike Crapo, R-Idaho.
- This amid optimism that the incoming administration of US President-elect, Joe Biden will move comprehensively to support the US and the world through the ongoing Covid-19 pandemic.
- Top officials in Canada want a chance to make the case for a long disputed oil pipeline to be built amid reports President-elect Joe Biden will cancel Keystone XL. Alberta Premier Jason Kenney said Monday he will seek legal damages if reports are true that Biden plans to scrap the pipeline on his first day upon taking office. Biden’s plan is outlined in transition documents seen by Canadian media outlets. “We hope President-elect Biden will show respect for Canada and will sit down and at the very least talk to us,” Kenney said. Biden spokesman Andrew Bates said Monday the transition team had no comment.
- On Tuesday, U.S. Treasury Secretary Steven T. Mnuchin announced that the U.S. Department of the Treasury approved more than $12 billion in payroll support for major passenger air carriers to support airline industry workers. Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (the PSP Extension Law) provides for up to $16 billion in payroll support for American workers employed by passenger air carriers and contractors (PSP2). Treasury concluded PSP2 agreements with Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 6.58%. Further, the yield on 2023 bond declined to 4.45%, while that for the longer-dated 2030 issue fell to 8.75%.
In early trade on Wednesday, the US dollar is trading lower against the South African rand at R14.9502, while the euro is trading lower at R18.1566. The British pound has declined against the South African rand to trade at R20.4026.
By the close of trade on Tuesday, the euro advanced against most of the major currencies.
- The BoJ is expected to take no action when it concludes its meeting early on Thursday, despite an escalating COVID-19 outbreak and a deflationary storm hitting Japan. In fact, some reports suggest the BoJ is considering scaling back some of its ultra-aggressive policies, but admittedly, this is not the time to be discussing an exit. As for the yen, its fate hangs on how global bond yields and risk sentiment develop, so US stimulus news may be the most crucial element. In contrast to most nations, Japan never entered a full-on lockdown.
- The British pound has posted slight gains in the Tuesday session. Currently, GBP/USD is trading at up on the day. It has been a quiet start to the week for the British pound. US banks and stock markets were closed on Monday for a national holiday, and the Tuesday data calendar is very light, with no UK data releases and just one minor event in the US. This sets the scene for Wednesday, which could see stronger movement from GBP/USD. The UK will release a host of inflation indicators, highlighted by headline CPI. The index is projected to improve to 0.5% in December, up from 0.3% beforehand.
- Investor sentiment in Germany rose in January, on improved expectations for exports, thus boosting the outlook for Europe’s largest economy.
- A separate gauge of current conditions also edged up in January. Meanwhile, German consumer price index declined further on an annual basis in December.
In early trade on Wednesday, the euro has advanced against the US dollar to trade at $1.2143, while it has marginally weakened against the British pound to trade at GBP0.8896.
By the close of trade on Wednesday, the South African rand weakened against the US dollar.
- Big jump in new China cases Yesterday’s data suggested that the spread of the coronavirus had slowed dramatically, with just 300 new cases reported in China, according to data from Johns Hopkins University. As at yesterday, the number of cases in mainland China was approximately 44,700, an increase of just 400 from the previous day. However, this morning, the total of cases has jumped to about 59,700 with total cases worldwide reaching 60,200. It is still unclear whether the jump is due to a revision of prior data or a fresh upsurge. China has reshuffled top officials in Hubei, the epicenter of coronavirus.
- Tonight South Africa and global investors will look at President Cyril Ramaphosa’s SONA. There are promises of fireworks from the EFF. It is stormy times for a President and a nation who remain unsure as to whether they will even get the opportunity to watch the SONA if the lights go off!
- African retail sales unexpectedly declined on an annual basis in December, recording its worst figure since 2009, amid poor consumer confidence and constrained household spending.
- In the US, Federal Reserve (Fed) Chair, Jerome Powell, reiterated his confidence in the US economic outlook and stated that Fed is keeping close tabs on the Coronavirus epidemic.
- On the political front, Senator, Bernie Sanders of Vermont won the Democratic presidential primary in New Hampshire.
- The yield on benchmark government bonds rose yesterday. The yield on 2021 bond advanced to 6.51% while that for the longer-dated 2030 issue rose to 8.87%.
In early trade on Thursday, the US dollar is trading 0.2% higher against the South African rand at R14.8895, while the euro is trading 0.2% higher at R16.1834. The British pound has gained 0.2% against the South African rand to trade at R19.2871.
By the close of trade on Wednesday, the euro declined against most of the major currencies.
- The eurozone’s seasonally adjusted manufacturing output plunged more than expected on a monthly basis in December.
- The European Central Bank’s (ECB) Chief Economist, Philip Lane, stated that the bank is keeping a close eye on the development of the coronavirus outbreak in China.
In early trade on Thursday, the euro has marginally slipped against the US dollar to trade at $1.0870, while it has marginally gained against the British pound to trade at GBP0.8391.