Bonds slightly firmer despite weaker rand
South African bonds were a little stronger on Wednesday afternoon, while the rand weakened on a slight recovery in the dollar.
Trading in the dollar has been choppy over the past few days ahead of the release of US consumer inflation data on Thursday. Weak inflation data could put the dollar under pressure and benefit US treasuries, analysts said, as the US Federal Reserve considers increasing interest rates again this year.
A weak dollar could benefit US treasuries with the 10-year yield falling to 2.05% last week, but rose to 2.1657% today.
At 3.31pm, the benchmark R186 was bid at 8.42% from 8.44% and the R207 at 7.12% from 7.125%.
The rand was at R13.1029 to the dollar from R13.0091, while the euro was at $1.1953 from $1.1966.
Non-residents bought an influential R4bn worth of bonds during Tuesday’s South African government bond auction, with most of the action taking place at the longer end of the curve, in R2044 and R2030 bonds.
Inflows following the strong auction caused some bull-flattening in government bonds, analysts at Nedbank Corporate and Investment Banking said, adding that movement in either direction on the rand had been unconvincing for most of the week.