The South African bond market retreated slightly on Friday morning, but the underlying trend remains firmly positive. The yield on the benchmark R186 crept up to 8.34% in early trade, from 8.31% on Thursday, but was on course for the strong finish for the second consecutive week. The much stronger rand environment and moderating inflation have been the key drivers in the bond market. "Both the more benign inflation outlook as well as the improving current account have boosted positive sentiment, which has also not been jaded by any negative political developments lately," Rand Merchant Bank analyst Deon Kohlmeyer said in a note. "All in all, the SARB [South African Reserve Bank] should have a more balanced outlook next week, but in all probability, it will not be ready to cut rates just yet. The US treasury bonds were slightly weaker in early trade, with the 10-year note hovering around 2.3414%, from 2.4070%.
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