Johannesburg – South African bonds eased in afternoon trade on Friday after US Federal Reserve chairman Ben Bernanke signalled that there would be no further quantitative easing (QE) in the short term.
In 2010 Bernanke used the Jackson Hole conference to signal the second round of QE.
“The recent US data seemed to rule out QE3‚ so the market should not have been surprised‚ but the bulls had to hear it from the horse’s mouth before they became convinced‚” a local bond trader said.
At 16:20‚ the benchmark R157 bond was trading at 5.480% from 5.425% shortly before Bernanke spoke at 16:00‚ 5.445% at Thursday’s close and 5.510% at Wednesday’s close.
The R207 was bid at 6.545% and offered at 6.530% from Thursday’ close of 6.545%‚ and the R186 was trading at 7.410% from 7.420% previously.
The rand was bid at R8.4071 per dollar from Thursday’s close of R8.4938 and Wednesday’s close of R8.4049.
Dow Jones Newswires reported that Federal Reserve chief Ben Bernanke voiced support for the central bank's previous monetary easing measures in prepared remarks before an economic policy symposium‚ but didn't outline any new steps to boost the US economy.
In a speech at the Fed's annual symposium in Jackson Hole Bernanke defended the benefits of the bank's previous efforts to stoke economic growth and flagged concerns about the pace of US economic growth. But he didn't tip his hand as to steps the central bank may take in the near future.
Central banks easy money policies‚ or quantitative easing‚ tend to draw investors worried about potential resulting inflation into gold and other precious metals.
Minutes of the central bank's last policy-making meeting‚ released last week‚ showed officials leaning toward action unless the US economy improves. That stoked hopes that Bernanke may hint at new measures in his speech on Friday.
Foreigners bought a net R1.039bn of South African bonds including repo transactions on Thursday after net purchases of R1.596bn of local bonds on Wednesday‚ data released by the JSE shows.
Nominal cumulative volume was R65.658bn on Thursday from R48.101bn on Wednesday.
Foreigners were net buyers of R1.004bn of local bonds excluding repo transactions on Thursday after net purchases of R1.791bn of local bonds on Wednesday.
For the year to date foreigners have been net buyers of R68.325bn of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359bn worth of local bonds‚ excluding repo transactions.
In the year to date foreigners have been net buyers of R68.001bn of local bonds including repo transactions. In 2011 they bought R37.501bn worth of local bonds.