The South African bond market was in a sweet spot on Monday morning, looking to build on last week’s gains that were spurred by the US Federal Reserve’s less aggressive approach in raising interest rates.

The yield on the benchmark R186 bond was at 8.480% in early trade, its lowest level since August, as the rand extended its rally to the dollar. The R186 bond settled at 8.490% on Friday.

"It appears that the broader emerging-market assets are back in favour with the foreign investor base," said Ashley Dickinson, head of fixed-income dealing at Sasfin Securities.

"SA is attracting much attention as decent yields and liquid currency combine to improve the investment case here."

Foreigners bought a net R785.53m worth local bonds last week, bringing the tally so far in 2017 to nearly R4bn, according to the JSE data.

Treasury bonds were little changed in early trade, although the dollar faced continued pressure due to the Fed’s slightly dovish stance on future rate increases, even as it raised rates by 25 basis points, as expected.

The US 10-year treasury bond was bid at 2.50%, little changed from last week.

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