The South African bond market was slightly weaker on Wednesday morning, taking its direction from a weaker rand ahead of the local inflation data, due for release later in the morning. Analysts expect consumer inflation to have moderated to an annual 6.5% in December, from 6.6% in November. "The downside pressure will be positive for local bonds, making real yields more attractive," Rand Merchant Bank analyst Gordon Kerr said in a note. A relatively benign inflation outlook may encourage the Reserve Bank to consider cutting interest rates in the future, which is positive for the bond market. The yield on the R186 bond edged up to 8.67% in early trade from 8.64% on Tuesday. The equivalent US treasury yield flattened to 2.3494% from 2.3958% on Tuesday.
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