Bonds weaker as rand loses ground
Nedbank Corporate and Investment Banking analysts say yields on the R186 returned to below pre-Nenegate levels only this week
The South African bond market was weaker at midday on Friday on the softer rand and even as US treasuries were sharply firmer.
Despite the softer trade, analysts remain positive about the prospects of the local market. Nedbank Corporate and Investment Banking (CIB) analysts said the R186 remained elevated after former finance minister Nhlanhla Nene was removed from his position in December 2015, or Nenegate. "Yields only firmed below pre-Nenegate levels this week," they said.
The R186 could test the 8.5% level and thereafter 8.36%, the 2016 best level, in the near term. Support was likely to hold close to 8.9%. "Longer-term resistance could occur at 8.1%," Nedbank said.
At 11.39am the yield on the R186 was at 8.675% from a previous close of 8.610%. The R207 was at 7.795% from 7.745%.
The rand was at R13.0948 against the dollar from R13.0200.
The 10-year US bond was at 2.4271% from 2.4923% as US bonds reversed an earlier weakening trend on indications from US Federal Reserve chair Janet Yellen that the Fed would be cautious with further rate increases this year.
US markets will be closed on Monday for President’s Day.