Bonds firm to their best level in 17 months as rand breaks through resistance
The South African bond market firmed to its best level since October 2015 in late afternoon trade on Thursday, after the rand broke through the R12.50/$ resistance level. The rand firmed in continued positive market sentiment following Wednesday’s upbeat economic data, showing that the current-account deficit narrowed to 1.7% of GDP in the fourth quarter, from 3.8%. Local bonds were also benefiting from firmer US treasuries and a bias towards emerging markets in risk-on sentiment, following the US Federal Reserve’s mildly dovish outlook last week. At 3.38pm the benchmark R186 was bid at 8.30% from 8.34% and the yield on the R207 was at 7.37% from 7.395%. Barclays Research analysts said they maintained a modest overweight position on equities over bonds. "We expect a slow drift higher in global bond yields, which would be supportive of emerging-market assets," Barclays said. The bid on the US 10-year bond was at 2.3989% from 2.4070%.
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