Bonds firm to best levels of 2017 on rand strength
Local bonds lead all the asset classes so far this year, with the bond index up 5%, while the all share has gained 4.3% and property 4.2%
The bond market was firmer in late afternoon trade on Monday on a slightly firmer rand, as the dollar failed to make much headway against the major currencies.
The yield on the R186 dropped to its lowest level so far this year, as bonds continued to gain traction from last week’s mildly dovish outlook from the US Federal Reserve regarding interest rates.
When yields fall, prices rise in the bond market.
Local bonds still lead all the asset classes so far this year, with the bond index up 5%. The all share has gained 4.3% and property has added 4.2%.
"Investors who are sitting in cash are losing out so far in 2017," said Stanlib retail investment director Paul Hansen.
At 3.40pm the benchmark R186 was bid at 8.45% from 8.495% and the yield on the R207 was at 7.51% from 7.5450%.
The rand was at R12.683 against the dollar from R12.7178.
Local bonds have been following US treasuries since last week, as weaker US 10-year bonds turned firmer on the Fed’s stance. Yields have tumbled from 2.61% to 2.5%.
"This is no doubt on perceptions that Fed chair Janet Yellen was not worried about the sudden jump in US inflation, seeing it as a short-term aberration," Hansen said.
The yield on the 10-year treasuries was at 2.4962% from 2.5007% previously, in late afternoon trade.