The South African bond market was firmer at midday on Wednesday after the rand surged to the best level in more than a month against the dollar. The rand reached a best intraday level of R13.5214 to the dollar from R13.65, with bond yields firming in response. At 11.49am the R186 was bid at 8.855% from 8.93% and the R207 was bid at 8.08% from 8.16%. Analysts said the market was reacting to expectations for lower inflation in SA next year. The Reserve Bank would be reluctant to raise interest rates in an environment of low growth reflected by Tuesday’s weak third-quarter GDP numbers. SA bonds offer good relative value, despite the elevated volatility from Sunday’s Italian referendum result, said Absa Asset Management fixed interest manager James Turp. But in the short term gains could be capped. Turp said the US Federal Reserve would probably raise interest rates next week. "This could lead to a higher trajectory for monetary policy in the US, thereby maintaining capital flows away f...
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