Bonds firmer as Hawks confirm raid on Gupta compound

South African bonds turned firmer at midday on Wednesday as steps surrounding the ANC’s decision to recall President Jacob Zuma gathered momentum.

The Hawks’ Serious Corruption Crime Unit confirmed that three people were arrested following a dawn raid on the Gupta compound in Johannesburg‚ including one Gupta brother. Two other suspects are expected to hand themselves in; they may include Zuma’s son‚ Duduzane‚ a business associate of the Guptas.

Although the ANC has recalled Zuma as head of state‚ he has yet to acknowledge the party’s decision.

At 11.30am‚ the R186 was bid at 8.405% from 8.44%‚ and the R207 at 6.985% from 7.025%. The rand was at R11.8579 to the dollar from R11.9629.

US bond yields fell ahead of the release of US inflation data later in the day. Investors have tightened their focus on inflation data after a report earlier this month revealed that wages rose 2.9% in January on a year-on-year basis‚ surpassing most forecasts‚ and spurring speculation across financial markets that the US Federal Reserve could raise interest rates more than the three times it forecast for 2018‚ Dow Jones Newswires reported.

Economists surveyed by The Wall Street Journal expect Wednesday’s consumer price index (CPI) to rise by 1.9% in January from the same period a year earlier.

Investors have been looking for confirmation that inflation is rising‚ which would support this year’s higher move in bond yields‚ the newswires reported.

The US 10-year treasury was last seen at 2.8294% from 2.8593%.