South African bonds were weaker in afternoon trade on Wednesday, despite positive consumer inflation data released in the morning supporting calls for further interest-rate cuts later the year. Local bonds were following a marginally softer rand as the dollar lost ground against the euro, indicating that the lower inflationary data was already priced into bond yield levels, despite calls that rates could be cut twice in 2017 as a result of the positive inflation data. "South African inflation eased by more than we’d expected in July, raising the prospect of two 25 basis-point cuts later this year, rather than the single cut we now expect," said Capital Economics analyst John Ashbourne. Inflation moderated to an annual rate of 4.6% in July, as expected‚ the lowest level since September 2015‚ from 5.1% in June‚ according to Statistics SA data.
Lower interest rates usually benefit bonds. At 3.33pm the R186 was bid at 8.565% from 8.52% and the R207 was at 7.33% from 7.285%. The ra...
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