South African bonds were steady on Friday morning as geopolitical risks resurfaced after North Korea fired another missile over Japan.

The missile, which was fired on Friday, was the second in less than a month. The missile launch is likely to scare investors away from risky assets and towards safe havens.

The Reserve Bank reported on Thursday that SA’s current account deficit increased to 2.4% of gross domestic product (GDP) from 2% in the first quarter.

The US consumer price index (CPI) 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.

Sasfin Bank fixed income trader Alvin Chawasema said while local current account data came in worse than expected, it had no discernible effect on yields but marked the beginning of the rand weakness that slipped further following the release of US consumer inflation.

"Accelerating inflation in the US economy saw emerging market currencies extend losses for a fourth consecutive session, with bonds struggling to keep up with treasuries as geopolitical risks weighed," said Chawasema.

At 9.05am the R186 was bid at 8.42% from 8.41%.

US 10-year treasuries were bid at 2.1884% from 2.1894%

The rand was at R13.1441 to the dollar from R13.1166.

Please sign in or register to comment.