Bond market needs careful watching
Despite a great January start and a good run in 2016, bonds are not guaranteed an exceptional showing in 2017
After putting on an exceptional showing last year, bonds have got off to a solid start in 2017. The JSE all bond index (Albi) delivered a total return of 2.3% in the first three weeks of January. Bonds were the place to be in 2016, with the Albi crossing the finishing line sporting a total return of 15.4%. The JSE all share index managed no more than a 5.5% total return. A repeat of last year’s winning performance from bonds is far from certain, though. “Bond yields started 2016 from high levels,” cautions Albert Botha, an Ashburton Investments fixed income portfolio manager. As always, it is important to remember that when bond yields rise their underlying prices fall. When their yields fall, bond prices rise. The headstart enjoyed by bonds in 2016 came courtesy of President Jacob Zuma’s firing of finance minister Nhlanhla Nene in December 2015. Zuma’s action resulted in SA having three finance ministers in four days and made the yield on the key R186 10-year government bond jump f...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.