Bonds marginally weaker as analysts warn correction may have gone too far
South African bonds were marginally weaker on Monday afternoon, with some analysts saying the market may be unduly pessimistic regarding further interest-rate cuts, as the market looks towards the medium-term budget policy statement on Wednesday. Bonds followed the softer rand, which lost 1.2% on Friday on a stronger dollar, and rumours that Deputy President Cyril Ramaphosa would soon be replaced. Friday also saw local government bond yields rise above their Brazilian counterparts for the first time in seven years. The markets were now pricing in just one 25-basis point cut in rates over the coming year. "We think that things have gone too far," said Capital Economics analyst John Ashbourne. While it now looked as though SA’s easing cycle would be more gradual than previously thought, it was likely that policy makers would cut rates further over the coming quarters, he said. The market for forward rate agreements (FRA’s) — which are used to hedge against interest-rate moves — has sh...
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.