South African bonds were marginally stronger on Friday morning, tracking a firmer rand as the market digested an unexpected 25 basis-point rate cut. Most economists have been expecting the Reserve Bank to leave the repo rate unchanged at 7% despite slowing inflation and SA’s dismal growth outlook. Bank governor Lesetja Kganyago on Thursday warned that SA was still at risk of internal and external shocks as global policy makers planned to tighten monetary policy and SA remained at risk of further credit ratings downgrades. Despite the surprise, bond trading on Thursday suggested the market may not have been caught too badly wrong-footed, Sasfin Securities’ head of fixed-income dealing Ashley Dickinson said. "In an environment where the greenback remained under pressure on global markets, there was insufficient evidence to conclude that decisive weakness for the rand would emerge as a result of the lower yield differential," Momentum SP Reid analysts said. At 9am the R186 was bid at 8...
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