The South African bond market was weaker at midday on Monday after the rand lost 30c against the dollar in choppy trade.
Bonds yields have risen‚ meaning prices have fallen‚ following President Jacob Zuma’s Cabinet reshuffle last week in which Malusi Gigaba replaced Pravin Gordhan as finance minister.
The rand weakened to R13.69/$‚ the weakest level since early January‚ on downgrade concerns‚ before firming to the R13.60/$ level again.
At 11.35am the yield on the benchmark R186 was at 8.97% from 8.84%. The yield on the R207 was at 7.85% from 7.75%.
Initial bond reaction to Gigaba’s appointment was muted at the end of Friday‚ with foreign investors buying R2bn of bonds on the day‚ taking the total for the week to R12bn.
TreasuryOne currency dealer Phillip Pearce said international investors were still yield-hungry and willing to take on additional risk to get it.
“But their risk appetite would need to be tempered with caution as most of the market fell into the lull of ignoring the political risk that needed to be priced into the rand‚” Pearce said.
Analysts expected local bond trading to remain volatile and headline-driven over the short term until greater clarity on fiscal policy direction was gained.
US treasuries were largely stable with the yield on the US 10-year bond at 2.3885% from 2.3849%.
Bonds weaken as the rand loses 30c against the dollar
Bonds yields have risen‚ meaning prices have fallen‚ following President Jacob Zuma’s Cabinet reshuffle last week in which Malusi Gigaba replaced Pravin Gordhan as finance minister.
The rand weakened to R13.69/$‚ the weakest level since early January‚ on downgrade concerns‚ before firming to the R13.60/$ level again.
At 11.35am the yield on the benchmark R186 was at 8.97% from 8.84%. The yield on the R207 was at 7.85% from 7.75%.
Initial bond reaction to Gigaba’s appointment was muted at the end of Friday‚ with foreign investors buying R2bn of bonds on the day‚ taking the total for the week to R12bn.
TreasuryOne currency dealer Phillip Pearce said international investors were still yield-hungry and willing to take on additional risk to get it.
“But their risk appetite would need to be tempered with caution as most of the market fell into the lull of ignoring the political risk that needed to be priced into the rand‚” Pearce said.
Analysts expected local bond trading to remain volatile and headline-driven over the short term until greater clarity on fiscal policy direction was gained.
US treasuries were largely stable with the yield on the US 10-year bond at 2.3885% from 2.3849%.
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