- Zambia’s Finance Ministry on Friday said that it was working on a timeline for the reform agenda it has agreed with the International Monetary Fund. Note, the Washington-based lender earlier last week has said that it’s up to Zambia to implement agreed policies to pave the way for further talks. According to the ministry, “the government of Zambia is currently in the process of finalizing the time frame for implementation of the agreed reform agenda while ensuring that Zambia’s development objectives are met and social protection for the most vulnerable is secured.” With parliament and cabinet having dissolved on Friday ahead of the August general election, a resumption in talks with the IMF is likely to be difficult until after a new government has been formed. It is, therefore, likely that a deal will only happen after the polls.
- The price of copper rebounded this morning following its first weekly loss in six weeks driven by supply concerns as strike action looms at Chile. Reuters reported that a union representing workers at BHP’s Escondida and Spence mines in Chile rejected the company’s contract offer, rais-ing the risk of a strike at the two sprawling copper deposits.
- It is worth noting that under Chilean law, either party has the ability to request government mediation for up to five days which is then ex-tendable for a further five days before the strike can begin. Most pending strike action is usually solved during this process; however the threat still exists.
- Stateside, data on Friday revealed that the momentum behind retail sales stalled in April. Core retail sales dropped to growth of 1.5% while the March data was revised higher. The effects of the stimulus cheques to households appears to have dissipated and any future growth will have to come from the opening up of the economy and the lifting of all restrictions. Although this data is mildly disappointing, it will likely regain a firmer footing in the months ahead as pent-up savings are deployed.
- The white House is ramping up its marketing campaign for its infrastructural spending plan as it seeks to persuade more people households and businesses that it will achieve its objectives without affecting the bulk of small businesses. In a report released on Friday, they state that less than 3% of 30mn small businesses will be affected by the increase in the corporate tax rate from 21% to 28% if they file taxes as a pass-through entity as a limited liability corporation. That is unlikely to pacify Republicans that are fundamentally opposed to the growing of the state and to raising taxes.
- In the FX market, the Kwacha remained on the defensive on Friday, plunging to another fresh low. The local unit is set to remain under pressure this week amid importer demand and pressure arising from debt servicing.
- Meanwhile, after its fall on Friday on some disappointing retail sales figures, the USD has found a slightly firmer footing this morning as concerns over the virus in Asia raised overall levels of risk aversion. For now though, any rebound in the USD will likely be tepid, with investors positioned for an ultra-accommodative Fed and a Biden administration that looks fully committed to pressing ahead with more fiscal stimulus, the anticipated recovery notwithstanding. Technically, the USD is still trading heavy and appears to be struggling to gain much traction in its recovery.
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