- According to estimates from a study published in the Lancet Global Health journal, coronavirus cases in Zambia from March to July may have been roughly 92 times higher than official statistics showed. Researchers tested people for infection in six districts across the nation in July and used the results to estimate a total of 454,708 cases for the period. That compared with the government’s official number of 4,917 infections. The study further added that most cases were asymptomatic and hospitals weren’t under strain during the period of the study. Zambia’s youthful population has been highlighted as the reason this might have been the case. Note, the research was carried out during the first wave of the outbreak in Zambia when recorded cases were relatively low. In a nutshell, the study suggests the pandemic affected many Afri-can nations far worse than was reported, largely because of a low level of testing.
- Copper received a shot in the arm yesterday with a number of factors supportive of the metal. The big macro event was the approval by the US House of Representatives of the $1.9trn stimulus package which is expected to underpin the recovery of the world’s largest economy. The US and China are the largest consumers of the red metal and thus the bid tone is fully justified.
- In addition concerns over supplies have manifested in the past couple of days. Worker and management at Antofagasta’s Los Pelambres cop-per mine in Chile have failed to reach an agreement on wages with workers rejecting the latest offer by the company. This sets the stage for strike action, it is worth noting that the Los Pelambres mine is responsible for some 6% of Chile’s total copper production.
- The big news in the US was about the House of Representatives passing the Stimulus Bill. Although more a rubber-stamping exercise, the move still offered some relief to financial markets, with equities powering to new highs in many jurisdictions. The bill now moves across to the White House where President Biden will sign it off by the weekend. Thereafter, deployment can begin next week, just in time to give the Q2 GDP growth stats a significant boost. The decision may be growth positive in the near-term but will need to usher in some fairly powerful re-forms in the latter part of the year if sustainability is to be restored that would help wean the government off the central bank asset purchase programme that has helped suppress yields for as long as it has.
- Inflation data released yesterday will be more good news for the authorities. Although rising, the data was slightly softer than expected which effectively helps the Fed keep the monetary taps open for longer to further bolster GDP growth. That will build the pressure for an inflation episode later this year, as the effects of such powerful monetary stimulus eventually finds expression in rising prices. However, until those pressures come through, the authorities will remain accommodative of growth.
- In another form of stimulus support, US lawmakers gave the final approval for a $14bn payrolls assistance package to US airlines in what amounts to a third round of support to the sector since March 2019. Air passenger travel fell by 60% through 2020, and the change in work cir-cumstances means that a full recovery will be elusive for a while to come.
- In the FX markets, consolidation was the order of the day as the Kwacha closed little-changed north of 21.900. Meanwhile, the USD has re-treated off its recent best levels, with yesterday’s softer than expected inflation data taking the shine off the bullish bias in the USD. After running hard in a short space of time, the USD was ripe for a breather and the inflation data provided the perfect catalyst for this to take place. Technically, the trade weighted USD can now retreat a little further before it stabilises, coinciding with a recovery in equity markets and a gen-eral recovery in risk appetite.
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