Local bonds firm further as rand is expected to strengthen
The market is expecting positive trade data to be released next week, as the consensus view is for another surplus in March
The bond market was firmer in late afternoon trade on Friday as analysts expected the stronger trend in the bond market to continue.
The market was eyeing trade data set to be released next week. The consensus view was for another surplus in March, of R7bn, following a surplus of R5.2bn in February.
The positive trade figures would be supportive of the rand, and so for bond yields to drop further as prices rise.
However, the rand was stable in late trade on Friday.
At 3.40pm the rand was at R13.1394 to the dollar from R13.1386. If the rand firms through the R13/$ level local bonds were set to trade firmer.
The yield on the R186 was at 8.61% from Thursday’s 8.68% and that of the R207 at 7.53% from 7.555%.
UK bond and US treasuries were firmer in afternoon trade as the pound retreated from firmer levels against the dollar recorded earlier in the week on the announcement by UK Prime Minister Theresa May that an UK election will be held on June 8.
The UK 10-year yield was at 1.0395% from 1.0681%. The US 10-year bond was at 2.2243% from 2.2314%.
The slightly lacklustre macroeconomic data of late has eroded perceptions with regard to the yield trajectory in the US in the quarters ahead, Momentum SP Reid analysts said.
Evidence suggested that the Federal open market committee was likely to retreat somewhat from its assertive stance earlier in the year, Momentum said.
US 10-year treasury yields have edged higher in the past two sessions but remain below 2.30%.