BONDS were softer at midday on Tuesday,
taking their cue from a weaker rand as the local currency pulled back
after recently benefiting from a weaker dollar.
At 10.38am‚ the benchmark R186 bond was bid at 9.185% and offered at 9.210% from Monday’s close of 9.145%.
The middle-dated R207 was bid at 8.655% and offered at 8.700% from a previous close of 8.615%.
The rand was trading at R14.9232 to the dollar from R14.7851 previously.
Nedbank CIB analysts said a hawkish South African Reserve Bank at the monetary policy review on Monday evening suggested higher local inflation over the long run, due to the indirect effects of higher food prices and the rand’s depreciation.
The increased risk of a higher rate increase profile put in place a flattener in the medium to longer term as the bond curve continued to trade steeper in early morning trade, they said.
Separately, the Treasury auctioned R700m of R2030, R850 R2035 and R800m of R2048 on Tuesday.
"We prefer the shorter dated stocks in the auction, with a bias to take some R2030 in light of the back-end steepener. Expect the auction to clear two points below market", Nedbank CIB said.
The analysts said markets continued to be headline driven, with Parliament debating the President’s impeachment on Tuesday morning and the possibility of disappointing global purchasing manager index statistics weighing heavily.
by Madeleine van Niekerk.
At 10.38am‚ the benchmark R186 bond was bid at 9.185% and offered at 9.210% from Monday’s close of 9.145%.The middle-dated R207 was bid at 8.655% and offered at 8.700% from a previous close of 8.615%.
The rand was trading at R14.9232 to the dollar from R14.7851 previously.
Nedbank CIB analysts said a hawkish South African Reserve Bank at the monetary policy review on Monday evening suggested higher local inflation over the long run, due to the indirect effects of higher food prices and the rand’s depreciation.
The increased risk of a higher rate increase profile put in place a flattener in the medium to longer term as the bond curve continued to trade steeper in early morning trade, they said.
Separately, the Treasury auctioned R700m of R2030, R850 R2035 and R800m of R2048 on Tuesday.
"We prefer the shorter dated stocks in the auction, with a bias to take some R2030 in light of the back-end steepener. Expect the auction to clear two points below market", Nedbank CIB said.
The analysts said markets continued to be headline driven, with Parliament debating the President’s impeachment on Tuesday morning and the possibility of disappointing global purchasing manager index statistics weighing heavily.
by Madeleine van Niekerk.
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