South African bonds were slightly softer in early trade on Wednesday ahead of the release of October producer inflation data.
At 0825 the key government R150 bond was at 11,260% compared with Tuesday’s close of 11,250% and Monday’s close of 11,450%, while the yield on the longer-
dated R153 was 10,810% from 10,770%. The newer R194 was bid at 10,975% compared with 10,910% at its previous close.
“We are seeing some profit taking ahead of the PPI data, but nobody wants to take big positions ahead of the data release,” said a bond trader.
South Africa’s October producer price index (PPI) is expected to increase by a median of 15.0% y/y, an easing from August and September’s 15.4% y/y rate,
according to an I-Net Bridge survey of private sector economists. The range of forecasts is relatively narrow, from 14.6% y/y to 15.5% y/y.
In addition, the South African Reserve Bank’s (SARB) Monetary Policy Committee begins its two-day meeting today and is due to announce its interest rate decision on Thursday afternoon. The market consensus forecast is that the SARB will leave interest rates unchanged.
The rand broke below R9,10 per dollar for the first time this year on Tuesday after the rand had weakened to the 9,70 per dollar level on Thursday. The local unit was last quoted at 9,2220 per dollar from Tuesday’s best level of 9,0585 and its close of 9,2290 and Monday’s close of 10,2650 and Friday’s close of 9,4600.
Foreigners were net buyers of R2,410-billion worth of South African bonds in the week ended November 22, after net purchases of R2,689-billion worth of local bonds the week before, figures from the Bond Exchange of South Africa show.
Foreigners were net buyers of R490,243-million worth of South African bonds on Tuesday after net buys of R214,782-million worth of bonds on Monday, Bond Exchange of South Africa statistics show. Nominal cumulative volume was R70,013-billion on Tuesday from R23,831-billion on Monday. – I-Net Bridge