THE DAILY BRIEF MARKETUPDATE TUESDAY,12JANUARY2021 GLOBAL MARKETS - CAPRICORN PRIVATE WEALTH

The Daily Brief

Market Update                                             Tuesday, 12 January 2021

Global Markets
Stocks took a breather on Tuesday, easing from record highs as political turmoil in Washington and
rising coronavirus cases gave pause, though a selloff in U.S. Treasuries extended as investors reckon
on a big spending government. The yield on benchmark U.S. government 10-year debt, which rises
when prices fall, gained as much as 2.4 basis points to a fresh ten-month high of 1.1580%.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3% after touching an all-time high
on Monday, led by a 1.6% drop in South Korea as investors took some profit from a soaring
Kospi. Drugmakers lifted Japan's Nikkei to a fresh three-decade high after reports of another
effective COVID-19 treatment, though the index eased to flat by lunchtime. S&P 500 futures were
steady in Asia on Monday. Strong inflows helped Chinese blue chips 1% higher.

A resurgent U.S. dollar clung to four days of gains against other major currencies, holding the euro
and yen close to multi-week lows. "We've seen a very strong week or so (in equities) and I think the
lower moves we are seeing are a bit of profit-taking," said Chad Padowitz, chief investment officer at
Talaria Capital in Melbourne. "I don't think higher interest rates or inflation expectations are being
an area of concern for equities at the moment."

Political uncertainty tempered the mood somewhat as Democrats introduced a resolution to
impeach U.S. President Donald Trump, accusing him of inciting insurrection following a violent attack
on the Capitol last week.

Overnight, the Nasdaq led modest losses on Wall Street, falling 1.3% as investors sold tech giants
who have taken actions against Trump and his supporters. Twitter tumbled 6.4% on Monday after it
permanently suspended Trump's account last Friday.

The U.S. yield curve is steepening because investors expect a big-spending, big-borrowing United
States government after Democrats last week won control of both houses of Congress. The yield on
U.S. 10-year debt is up 23 basis points already this year and the spread between the two-year and
10-year Treasury yields is now wider than 100 basis points for the first time since July 2017. Flows
from the huge and sudden selloff have supported equities while tapping the brakes on short dollar
positions. Renewed focus on inflation expectations will have investors closely watching U.S. CPI data
due on Wednesday.

Meanwhile, the dollar index has bounced 1.5% from last week's nearly three-year low as investors
trim what have become very large short positions. "We shift towards being net neutral on the dollar
for now, pending how Treasury yields evolve in the coming sessions," said OCBC Bank strategist
Terence Wu in a note to clients. "Our bias is for the 10-year yield to experience some pull-back ...
we will more concerned should the 10y yield breach 1.25-1.30% levels and be on a clear path
towards 1.60%. That may be the signal for a more sustained dollar strengthening."

Elsewhere, investors are expecting guidance on the extent to which executives see a rebound in
2021 earnings and the economy from results and conference calls from JP Morgan, Citi and Wells
Fargo on Friday. U.S. crude was steady at $52.25 per barrel and Brent was flat at $55.64. Gold
which has been sold as U.S. yields rise because it pays no interest, steadied at $1,850 an ounce.

Domestic Markets
The rand hit a two-month low on Monday as the U.S. dollar gained on further stimulus hopes, while
fears of tighter domestic coronavirus restrictions weighed on the South African currency.

At 1500 GMT, the rand was at 15.5800 versus the dollar, 1.86% weaker than its previous close, and
trading at its weakest since Nov. 13. "A stronger U.S. Dollar and a worsening COVID-19 situation in
South Africa could see a break above resistance toward the November swing high at 15.7357,"
Warren Venketas, an analyst at IG in Johannesburg, said in a note.

South Africa's President Cyril Ramaphosa was due to address the nation on the government COVID-
19 response at 1800 GMT, as record-high infection rates raised fears of lockdown measures.

The rand slumped around 4% against the U.S. currency last week, as sentiment soured over a new
peak in daily coronavirus infections and doubts over vaccine supplies. South Africa has recorded
more than 1.2 million COVID-19 cases, the most on the continent, but it is yet to start vaccinating its
population or receive its first doses. A sluggish vaccination programme would dent prospects for
recovery in an economy that is forecast to have contracted by at least 7% last year.

Stocks ended firmer after a volatile session as anxious investors positioned their bets ahead of
Ramaphosa's address, which Cratos Capital equities trader Greg Davies said might be "making
investors a little bit uncertain". But market heavyweights Naspers and its international arm Prosus
kept gains intact, lifting the Johannesburg All-Share index up 0.38% and the Top-40 index up
0.5%. Naspers climbed 4.31%, while Prosus rose 3.92%. "We're having some rand weakness which

is sort of keeping our rand hedges a little bit on the green side," BP Bernstein portfolio manager
Francesco Sturino said.

Government bonds dipped, with the yield on the 2030 instrument rising 5 basis points to 8.84%.

Corona Tracker

                      The number of new cases is distorted by cut-off times.

Source: Thomson Reuters

Market Overview

Notes to the table:
    The money market rates are TB rates
    “BMK” = Benchmark
    “NCPI” = Namibian inflation rate
    “Difference” = change in basis points
    Current spot = value at the time of writing
    NSX is a Bloomberg calculated Index

Important Note:
This is not a solicitation to trade and CAM will not necessarily trade at the yields and/or prices
quoted above. The information is sourced from the data vendor as indicated. The levels of and
changes in the yields need to be interpreted with caution due to the illiquid nature of the domestic
bond market.

                                                                                 Source: Bloomberg

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Disclaimer
The information contained in this note is the property of Capricorn Asset Management (CAM). The
information contained herein has been obtained from sources which and persons whom the writer
believe to be reliable but is not guaranteed for accuracy, completeness or otherwise. Opinions and
estimates constitute the writer’s judgement as of the date of this material and are subject to change
without notice. This note is provided for informational purposes only and may not be reproduced in
any way without the explicit permission of CAM.