Bonds come off earlier lows after auction
SOUTH African bond yields retreated from their highs at midday on Tuesday, with moves lower supported by the slight firming of the rand and a positive bond auction.
The rand tested the R12 to the dollar mark during the mid-morning session but struggled to break below this point amid a lack of significant data drivers.
Investors expect the local unit to remain range-bound until the release of US employment figures later in the week.
At 12.15am‚ the benchmark R186 was bid at 8.030% and offered at 8.045% from a previous close of 8.040%.
The middle-dated R207 was bid at 7.505% and offered at 7.520% from a Monday close of 7.520%.
At the weekly auction earlier, the Treasury placed R850m of R2030 bonds, R850m of R2037 bonds and R650m of R2048 bonds.
Bidding interest totalled R10.5bn, according to a local trader, extending a trend that has seen local debt instruments experience strong demand, despite rate hike fears.
Last week, bidding interest was recorded at about R12bn. The fall in demand was not too concerning, according to the local trader, as bidding interest was still high by historic standards.
"The trend over the last few sessions has been strong demand at higher yields," ETM market analyst Rob Price said.
Generally, higher yields are a sign of bonds weakening and less appetite for risk.
But this was not the case at present, as "the higher yields were enticing investors with the appetite for risk at those levels to buy", noted Mr Price.
Event risk is expected to remain muted until the US releases the closely watched non-farm payrolls report on Friday, which should dictate the next path that yields will follow.
© BDlive 2015