Local bonds were little changed on Monday morning as investors traded cautiously ahead of central bank meetings in SA and the US.
At 8.30am‚ the benchmark R186 bond was bid at 9.110% and offered at 9.090% from a previous close of 9.100%.
The middle-dated R207 was bid at 8.635% and offered at 8.610% from a Friday close of 8.625%.
The overwhelming consensus among private sector economists is that the South African Reserve Bank’s monetary policy committee will leave rates on hold after January’s hefty 50-basis points hike‚ which took the repo rate to 6.75%.
Since then‚ changing global and domestic economic conditions may have tempered the need for aggressive hikes this year.
Nomura economist Peter Attard Montalto is one of the few who expect the committee to hike rates a further 25 basis points. “It’s a tug of war between (on one hand) a more benign inflation path and a strong rand (and on the other) a range of bearish factors‚ including inflation expectations‚” he said.
The Bank will announce its decision on Thursday.
The US central bank is also expected to leave rates on hold on Wednesday. But analysts and investors said easing market turmoil‚ a strong labour market and some signs of an uptick in inflation in the world’s largest economy would give the Fed wiggle room in tightening monetary policy in the months ahead‚ Dow Jones Newswires said.
“Investors are starting to position for a hawkish Fed‚” said Anthony Cronin at Société Générale. “Yields can still go higher if the Fed signals it may raise rates two or three times this year‚” he said.
Investors lightened up on US government bond holdings on Friday ahead of the Fed meeting‚ pushing the yield on the benchmark 10-year note toward 2%.
The yield on the benchmark 10-year note settled at 1.977% on Friday‚ compared with 1.927% on Thursday. – Tiso Black Star Group Digital/BDlive
Investors trade cautiously as central bank action comes into focus on JSE
At 8.30am‚ the benchmark R186 bond was bid at 9.110% and offered at 9.090% from a previous close of 9.100%.
The middle-dated R207 was bid at 8.635% and offered at 8.610% from a Friday close of 8.625%.
The overwhelming consensus among private sector economists is that the South African Reserve Bank’s monetary policy committee will leave rates on hold after January’s hefty 50-basis points hike‚ which took the repo rate to 6.75%.
Since then‚ changing global and domestic economic conditions may have tempered the need for aggressive hikes this year.
Nomura economist Peter Attard Montalto is one of the few who expect the committee to hike rates a further 25 basis points. “It’s a tug of war between (on one hand) a more benign inflation path and a strong rand (and on the other) a range of bearish factors‚ including inflation expectations‚” he said.
The Bank will announce its decision on Thursday.
The US central bank is also expected to leave rates on hold on Wednesday. But analysts and investors said easing market turmoil‚ a strong labour market and some signs of an uptick in inflation in the world’s largest economy would give the Fed wiggle room in tightening monetary policy in the months ahead‚ Dow Jones Newswires said.
“Investors are starting to position for a hawkish Fed‚” said Anthony Cronin at Société Générale. “Yields can still go higher if the Fed signals it may raise rates two or three times this year‚” he said.
Investors lightened up on US government bond holdings on Friday ahead of the Fed meeting‚ pushing the yield on the benchmark 10-year note toward 2%.
The yield on the benchmark 10-year note settled at 1.977% on Friday‚ compared with 1.927% on Thursday. – Tiso Black Star Group Digital/BDlive
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