South African bonds were slightly firmer on Friday morning as global markets awaited the release of US inflation data later in the afternoon.
US inflation is a key figure watched by Federal Reserve Bank officials in determining the pace of interest-rate increases.
A rise in interest rates could draw more investors back to investing in the US and spark an outflow of capital from emerging markets like SA.
Fed chairperson Janet Yellen took a cautious approach this week towards policy tightening and signalled that interest-rate increases would be gradual‚ provided inflation remained under control.
The Dow Jones Newswires reported that on Thursday Yellen said “we’re watching inflation very carefully in light of low readings. I think it is premature to conclude that the underlying inflation trend is falling well short of 2%. I haven’t reached such a conclusion.”
The Fed is concerned that inflation remains below its 2% target and would like to see it there in the coming months.
Rand Merchant analyst John Cairns said expectations were for a 0.2% month-on-month increase‚ which would take the year-on-year rate down to 1.7%.
At 9.01am the benchmark 10-year R186 was bid at 8.71% from Thursday’s 8.75%.
US 10-year Treasuries were bid at 2.3205% from 2.3412%.