Bonds range bound despite North Korean missile and London terror attack
South African bonds were marginally firmer on Friday afternoon, despite the return of geopolitical tension over North Korea and a terror attack in London.
An explosion hit a London subway train on Friday, injuring 22, in what UK police were treating as a terrorist attack, Dow Jones Newswire report.
North Korea earlier fired another missile over Japan, in a show of defiance to the international community, which recently slapped Pyongyang with sanctions after it conducted a nuclear bomb test earlier in September.
Global markets were already subdued, but had seemingly brushed off the latest missile launch from North Korea, the newswire said.
Despite rand weakness this week, bonds had continued to find support, and could be expected to trade in narrow ranges into the weekend, analysts said.
Sasfin Securities bonds analysts said while local current-account data came in worse than expected on Thursday, it had no discernible effect on yields, but marked the beginning of the rand weakness, with the currency slipping further following the release of US consumer inflation.
The US consumer price index rose 0.4% month on month in August, with much of the gain owed to a sharp rise in petrol prices, caused by Hurricane Harvey.
This has led to some speculation that the US Federal Reserve would raise rates in December.
The local bond market recorded net outflows on Thursday, as the rand had come under sustained pressure over the past few sessions‚ said Nedbank Corporate and Investment Banking analysts.
Statistics indicated that locals had bought bonds on Thursday, said Sasfin.
At 3.30pm the R186 was bid at 8.405% from 8.41% and the R207 at 7.08% from 7.09%.
US 10-year treasuries were bid at 2.1937% from 2.1894%
The rand was at R13.1642 to the dollar from Thursday’s R13.1166.