Bonds weaken as rand’s Ramaphosa rally fades
The annual interest rate investors demanded from the government’s R186 10-year bonds rose by six basis points, or 0.7%, on Wednesday morning, to 8.64% from 8.58%. The rising yield came in tandem with the rand weakening to near R12.50 to the dollar, as a rally in which the rand strengthened to R12.24 on December 28 took a breather. The rand’s "Ramaphosa rally" — in which the currency strengthened from about R13.50/$ before the ANC’s conference started on December 16 to under R12.30 after Cyril Ramaphosa’s victory in the party’s presidential election was announced on December 18 — was accompanied by the R186 bond’s narrowing yield. On December 14, before the ANC’s conference, the R186 bond’s yield was 9.275%. This narrowed all the way to 8.535% on December 27 on reports the ANC’s new leadership was negotiating and early end to President Jacob Zuma’s scandal ridden term ahead of SA’s 2019 national elections.