The South African bond market settled into a narrow trading range on Wednesday‚ suggesting caution before US Federal Reserve chairwoman Janet Yellen’s testimony to US Congress later in the day.
Investors will be looking for some clarity on the Fed’s future interest rate increases‚ following a mixed US jobs report last Friday.
While the world’s largest economy continues to create jobs at a steady pace‚ inflation continues to run below the Fed’s target of 2%. The Fed has raised interest rates by a cumulative 50 basis points so far in 2017.
Higher interest rates in the US could divert fund flows from emerging markets‚ including SA.
The yield on the benchmark R186 bond was at 8.88% in early trade‚ little changed from 8.89% on Tuesday‚ although better than the 9% seen on Monday.
The dollar was slightly weaker on global markets ahead of Yellen’s two-day address. The yield on the benchmark US treasury note contracted to 2.3632% in early trade‚ from 2.3830%.
Also in focus is the central bank in Canada‚ which is expected to raise interest rates later in the day.
Source: TMG Digital.