Bonds drift weaker on profit-taking

Johannesburg - South African bond yields continued to weaken in quiet late trade on Monday, on the back of some profit-taking.

By 15:50 the benchmark R157 bond was bid at 7.702 from 7.180% at its close on Friday. The benchmark R207 was bid at 7.905% from 7.860%, while the R186 was bid at 8.010% from 7.945%.

The rand was bid at R7.3115 to the dollar from R7.2950 at its previous close.

"Bonds have had a hard run in the last week, so we're seeing some profit-taking. Overall it's been an extremely quiet day, with no data to give the markets any real influence," said a local trader.

Bonds rallied last week on GDP, PPI and CPI data, which has raised expectations that a rate cut could be on the cards when the Sarb meets in September.

Foreigners were net sellers of R63.605m of South African bonds including repo transactions on Friday after net purchases of R2.157bn of local bonds on Thursday, Bond Exchange of South Africa statistics show.

Nominal cumulative volume was R15.664bn on Friday from R29.946bn on Thursday.

Foreigners were net sellers of R48.685m of South African bonds excluding repo transactions on Friday after net purchases of R2.158bn of local bonds on Thursday.

In the year to date foreigners have been net buyers of R66.867bn worth of local bonds, excluding repo transactions.

So far for total transactions, including repo transactions, foreigners have been net buyers of R60.164bn worth of bonds.

In 2009 foreigners were net buyers of R27.755bn worth of local bonds, excluding repo transactions, while for total transactions, including repo transactions, foreigners were net sellers of R2.424bn worth of bonds.