The Markets Daily

After much build up, the G7 have met this past weekend and there were no major surprises to come out of the meeting. There has been a pledge to provide vaccinations to developing countries (although not quite as much as was anticipated), agreement to invest in infrastructure in developing nations in an effort to bolster relations and counter China’s efforts and a general stand of unity. 

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My head is spinning with the flurry of international news. The G7 meetings is an obvious platform for staged rhetoric on anything from Brexit to green transitions with a fair bit of attention being placed on efforts to end the pandemic by December 2022. The US is garnering attention with it being the President’s first overseas trip since taking office last year. 

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I find that Wednesday is often greeted with some enthusiasm for those of us with a 5-day working week – it is the watershed day as during the course of the day, we fall precisely between the previous weekend (a long distant memory from as early as 9am on a Monday!) and the forthcoming weekend – a break to look forward to with plans to be made and minimal, or no work. 

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It may be a week with a number of important data releases and policy decisions and despite a number of GDP releases today, it would seem that markets are in a bit of a holding pattern waiting for Thursday’s US CPI print as inflationary fears remain front and centre. 

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I remember sitting in one of my university classes learning about the Dornbusch exchange rate overshooting model. I was young and naïve and knew little about the intricacies of being an economist in the “real world”, but I was at least aware already of the rand’s volatility and so the lecture on the overshoot model remained firmly stuck in my mind (the concept, not quite the full detail!). Since I have entered the labour market there have been many times that the rand has moved sharply. 

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As a young FX analyst, an undisclosed number of years ago, I was taught the importance of US labour data to international markets. The economic relationship was intuitive. It was the reaction to the data and ensuing frenzied trade that astounded me. 

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Ahhh, the cold kiss of a Johannesburg winter that bites at your nose and leaves your chest feeling as though you’ve scaled Everest in record time – a feat which was actually recently accomplished by a female teacher from Hong Kong who scaled the peak with 13 hours to spare. 

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Opec+ meet today in Vienna to discuss oil supply, it is largely expected that the easing of supply cuts in July will be signed off as Opec expects that oil demand is set to increase steadily and oil stockpiles be drawn down. That demand is set to increase is not surprise, the start of June marks the start of the norther Summer season and with substantial vaccination progress in the US, UK and at a bit of a lag, 

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It was the source of endless speculation as SA’s covid-19 figures started rising over a week ago, but as of today, SA has moved from lockdown level 1 to adjusted level 2. President Cyril Ramaphosa held a family meeting last night, and as is typical when these meetings are called, SA saw a change in lockdown regulations.  

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The weekend bekons. It is just a few hours between now and the end of the work week. That said, there is definitely still plenty to be done before we can power down ourselves and our computers. The most anticipated release for today is not listed above in our daily data releases, but rather a US$6 trillion federal budget proposal by US President Joe Biden. 

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