Bonds are little changed despite inflation print surprising to the upside
South African bonds were steady shortly before midday on Wednesday, tracking a weaker rand, but showing little reaction to a higher-than-expected inflation print for September. Inflation‚ as measured by the annual change in the consumer price index (CPI)‚ accelerated to 5.1% in September from 4.8% in August, worse than economists’ consensus of 4.9%, It is, however, comfortably within the Reserve Bank’s target range of 3%-6%. Higher inflation tends to weaken bonds, as it reduces the value of cash flows. Economists forecast the uptick in inflation to come from higher petrol and diesel costs, and the expected effect of quarterly price surveys of rental inflation and domestic worker wages. Local bonds were little moved by President Jacob Zuma’s surprise Cabinet reshuffle on Tuesday, which also had a minimal effect on the rand. Inflows were muted on Tuesday. Rand Merchant Bank analyst Deon Kohlmeyer said that considering the reshuffle news was released shortly before the weekly Treasury ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.