Bonds were weaker on Tuesday morning ahead of a rate decision by the Reserve Bank’s monetary policy committee (MPC) later in the week.
Most economists are expecting the Bank to raise interest rates by at least 25 basis points on Thursday amid a deteriorating inflation outlook brought about by a weak rand.
At 9.15am‚ the benchmark R186 was bid at 9.700% and offered at 9.680% from Monday’s close of 9.590%.
The middle-dated R207 was bid at 9.090% and offered at 9.175% from a close of 9.085% previously.
The rand was trading at R16.6219 from R16.5361 previously.
Barclays Research said in a morning note that after buying South African government bonds during the first two weeks of the year‚ foreign investors sold R5bn worth of South African paper last week.
“Hence‚ there has been a net R3.7bn outflow from the bond market year to date. In December‚ foreign investors sold R8bn of (South African government bonds) after buying only R2.8bn in full year 2015‚ although that was more than in the previous two years (2014: R5.9bn outflow; 2013: R1.5bn inflow)‚ but less than the record R88bn of inflows in 2012‚” the bank said.
Bonds weaker ahead of rate decision
Bonds were weaker on Tuesday morning ahead of a rate decision by the Reserve Bank’s monetary policy committee (MPC) later in the week.
Most economists are expecting the Bank to raise interest rates by at least 25 basis points on Thursday amid a deteriorating inflation outlook brought about by a weak rand.
At 9.15am‚ the benchmark R186 was bid at 9.700% and offered at 9.680% from Monday’s close of 9.590%.
The middle-dated R207 was bid at 9.090% and offered at 9.175% from a close of 9.085% previously.
The rand was trading at R16.6219 from R16.5361 previously.
Barclays Research said in a morning note that after buying South African government bonds during the first two weeks of the year‚ foreign investors sold R5bn worth of South African paper last week.
“Hence‚ there has been a net R3.7bn outflow from the bond market year to date. In December‚ foreign investors sold R8bn of (South African government bonds) after buying only R2.8bn in full year 2015‚ although that was more than in the previous two years (2014: R5.9bn outflow; 2013: R1.5bn inflow)‚ but less than the record R88bn of inflows in 2012‚” the bank said.
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