South African government bonds were largely unchanged on Tuesday afternoon, as the rand made a short-lived break below R12 to the dollar.

The rand, however, battled to hold onto the firmer levels after the dollar regained some lost ground against the euro.

Local bonds shrugged off some risk-off selling seen on Monday, with local yields remaining attractive, analysts said.

At 3pm the benchmark R186 government bond was bid at 8.065% from 8.075% and the R207 at 6.92% from 6.925%.

The rand was at R12.0189 to the dollar from R12.0507. It reached an intra-day best level of R11.9685.

Local bonds have been the best-performing asset class so far this year with the environment remaining positive for the market as the US 10-year bond has failed to break through 3% despite tighter monetary policy from the US Federal Reserve.

Equity markets are set to remain buoyant on the growth prospects for the US economy. "Price-to-earnings ratios [of US markets] are usually well supported until the 10-year reaches 5%," said Stanlib retail investment director Paul Hansen.

He said the current 10-year yield was comfortably below these levels. "The gradual increase of short-term rates by the Fed should not be problematic for equities in the short-term," he said.

The US 10-year was last at 2.841% from 2.8281%.