Local risk-assets sold off sharply during Tito Mboweni’s budget speech on Wednesday afternoon, before recovering to about where they were when he began speaking. The yield on the benchmark R186 government bond rose to a two-month high, but analysts cited positive news on bailouts for Eskom as a reason that ratings agencies may spare SA from further downgrades. The rand had been trading at R14.16/$ shortly before Mboweni began speaking. At 2.15pm it had fallen 2.27% to R14.3661/$, while the yield on the government’s 10-year bond, due in 2026, rose above 9% for the first time since December 2018. The R186 was bid at 9.05%, 2% weaker than its close of 8.865% on Tuesday. By 3pm, the rand was back at R14.16/$, while the R186 was bid at 8.89%, unchanged from its level before the speech. The government’s plans for Eskom are financially responsible, and thus well received by the market, said Monex Europe foreign exchange analyst Simon Harvey.

“The initial sell-off looked sharp, but th...

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