BOND MARKET RATES LITTLE CHANGED
BRIAN KANTOR: Rand shrugs off Trump shock — but growth still shuffling
The Reserve Bank must tackle the downside risks to the economy and lower interest rates, writes Brian Kantor
The Trump shock has been working its way through the markets. Expectations for US growth post-Trump were revised upwards to the advantage of US equities generally. Emerging market (EM) equities, by contrast, have suffered absolutely and relatively, with the JSE in US dollars performing as it usually does — in line with the average EM market, losing about 6% of their pre-Trump dollar values. The market and central bank governors have long feared the effect of higher bond yields in the US on emerging market currencies, inflation and interest rates. Long-term RSA bond yields in SA rose immediately in sympathy with higher US bond yields. But recent interest rate trends in the RSA bond market have proved much more encouraging. Yields have receded as the spread between RSA and US T Bond yields have narrowed, leaving rates little changed from pre-Trump levels. These trends indicate that a feared Trump tantrum in the RSA bond markets has not materialised.A related and similarly favourable r...
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