Bonds weaken as US treasuries consolidate above 3%
South African government bonds were softer on Tuesday morning, in line with the rand, as global bond yields pushed higher.
Overnight comments from a European Central Bank (ECB) monetary policy member that the bank’s interest-rate guidance might need to be adjusted weighed on European bonds, with US treasuries following suit.
The US 10-year bond had climbed above 3% in April, but has since retreated after last week’s lower than expected inflation data, which helped soothe the concern of aggressive hiking by the US Federal Reserve.
Wednesday’s major data release — US retail sales — could give markets further direction. Chinese economic data earlier also contributed to some risk-off sentiment, analysts said.
While local unemployment data was due later, the rand remained at the mercy of international factors, said Nedbank Corporate and Investment Banking analysts.
The weaker local currency was likely to weigh on domestic bonds.
At 10am, the benchmark R186 government bond was bid at 8.4% from 8.325% and the R207 was at 7.255% from 7.19%.
The rand was at R12.4159 to the dollar from R12.3287.
The US 10-year bond was last at 3.0217% from 2.9613%.
The German 10-year bund was at 0.6264% from 0.6221%.