US treasuries rose alongside Japanese and Australian bonds after the World Bank pared its projections for economic expansion in 2013 to 2.2% from a January estimate of 2.4%. Foreign investors were net buyers of South African bonds yesterday after four straight days of outflows.
“The sell-off in emerging-market debt has eased,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “This is very apparent in our market, where Tuesday’s drop-back in yields across the curve has been sustained.”
South Africa’s currency gained 1.4% to 9.9751 per dollar as of 11:40 am in Johannesburg on Thursday. Yields on benchmark 10.5% bonds due December 2026 fell three basis points, or 0.03 percentage point, to 7.92%, after dropping 32 basis points in the previous two days.
Foreign investors bought a net R1.95-billion ($194-million) of South African bonds on Wednesday, resulting in net inflows this month of R291-million after outflows of R4.71-billion in May, according to JSE data.
South Africa’s benchmark stock index dropped 1% to the lowest level since May 3. – Bloomberg