SA bonds unchanged on subdued inflationary outlook following expected rate cut
South African government bonds were largely unchanged on Thursday at midday, as the market awaited new developments following the Reserve Bank’s expected decision on Wednesday to cut rates by 25 basis points to 6.75%. "Foreign flows remain positive, but marginal," analysts at Nedbank Corporate and Investment Banking said. The favourable outlook on inflation is likely to support local bonds over the short term, analysts said. "Risks to the inflation outlook have subsided somewhat, as longer-term inflation expectations, surveyed in the first quarter of 2018, dropped to a record low of 5.3%," said Momentum Investments analyst Sanisha Packirisamy. At 11.30am, the R186 was bid at 7.955% from 7.900% and the R207 at 6.715% from 6.690%. The rand was at R11.7762 to the dollar from R11.7752. The US bond market has already priced in three rate hikes in the US this year. A more hawkish stance from the US Federal Reserve might see a sell-off in the benchmark 10-year treasury to above 3%. However...
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