Picture: BUSINESS DAY
Picture: BUSINESS DAY

The South African bond market was off to a positive start on Thursday morning as it took guidance from a stronger rand that, in turn, was responding to global forces.

The dollar was on the defensive after the Federal Reserve left interest rates unchanged as expected on Wednesday. Concluding the first policy meeting since Donald Trump took office, the Federal open market committee noted that its approach on interest rates would continue to be shaped by economic outlook as informed by incoming data.

"Now that we have the [Federal open market committee meeting] out of the way, focus shifts to the ECB [European Central Bank] meeting today and US nonfarm payrolls," Rand Merchant Bank analyst Michelle Wohlberg said. "Given the large event risk over the next two days, we expect bonds to continue trading in a narrow range ahead of each event with a bias to move slightly lower [stronger], tracking both the rand and US treasuries."

At 9.04am, the yield on the benchmark R186 was at 8.845%, from 8.850% on Wednesday. The rand strengthened to highs of R13.3721 from R13.4725.

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