South African bonds were weaker in afternoon trade on Tuesday on a stronger dollar as the rand held steady at R13.32 to the greenback. The dollar strengthened following remarks from US Federal Reserve officials that further rate hikes were likely, with the market anticipating a December increase. Three further hikes of 25 basis points each in 2018 might be in the offing as the Fed reduces its balance sheet further. "We expect the Fed’s balance sheet to normalise at about $3-trillion in three years," Barclays Research analysts said. The balance sheet at present amounts to $4.5-trillion with the Fed still buying bonds at a monthly rate of between $65bn and $75bn. This buying spree will now gradually be reduced as part of a normalisation process. Local factors kept bonds on the back foot, too, with reports that the government would seek $7.6bn from the Public Investment Corporation (PIC) to fund state firms weighing on the market. Finance Minister Malusi Gigaba has, however, rubbished ...
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