South African bonds were firmer on Tuesday afternoon, as the rand gained marginally against the greenback on indications that controversial ANC secretary-general Ace Magashule may lose his position in the event of a recount.

Reports on Tuesday suggested that 68 ballots had not been counted during leadership elections that resulted in a victory for newly elected ANC president Cyril Ramaphosa.

The missing votes could potentially be enough to close the 24-vote gap in the race for the position of secretary-general, with Magashule seen as pro-Nkosazana Dlamini-Zuma. Magashule’s rival for the position, Senzo Mchunu, is a Ramaphosa supporter.

A carefully worded statement by ratings agency Moody’s also supported sentiment. It said Ramaphosa’s victory opened up the tentative prospect of a shift in policy and a rise in business confidence that could reverse the gradual deterioration in SA’s credit fundamentals.

However, Moody’s cautioned that substantial political obstacles to a marked policy shift remained. "Most importantly, it is unclear whether Ramaphosa will have the political weight in parliament to implement any such shift."

At 3pm, the R186 was bid at 8.69% from 8.95% and the R207 at 7.505% from 7.765%.

The rand was at R12.7429 to the dollar from R12.7622.

The dollar remained weaker in late trade on Tuesday, still weighed down by worries that the US Federal Reserve may not raise interest rates at a faster pace next year despite solid economic growth, Dow Jones Newswires reported.

US treasuries fell after the latest signs of progress on a tax-cut package. Tuesday could witness a critical vote by House Republicans on the US tax code. The Senate is expected to follow later on Tuesday or Wednesday.

The US 10-year treasury was last seen at 2.3989% from 2.3917%.

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