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Bonds firm, CPI 'boosts' sentiment

Johannesburg - South African bonds were firm in noon trade on Wednesday. A local trader said: "The fact that CPI wasn't a bad number and there were no nasty surprises, improved sentiment - the rand also helping a bit. Guys are watching for retail figures a bit later."

Statistics SA (Stats SA) said on Wednesday, that the increase in South Africa's consumer price index (CPI), which is used by the SA Reserve Bank (Sarb) for its inflation target, was 5.7% year on year (y/y) in September, from 5.3% y/y in August.

The CPI for September was expected to tick up to 5.6% year on year (y/y), according to a survey of leading economists by I-Net Bridge.

Forecasts among the twelve economists ranged from 5.5% to 5.8%. CPI was 0.4% month on month (m/m) from 0.2% in August.

Standard Bank said in a report that they had expected an out-of consensus CPI print in September as it was a particularly high survey month, which opened the door for upside surprise and could assist CPI growth to edge closer to the upper limit of the inflation target before year-end.

By 11:50, the benchmark R157 bond was trading at 6.750% from its previous close of 6.790%. The R207 was bid at 8.050% and offered at 8.055% from a previous close of 8.100% and the R186 was trading at 8.450% from its close of 8.500%.

The rand was bid at 7.9511 against the dollar from its previous close of 7.9634.

Retail sales data will be released at 13:00.

According to a survey of leading economists by I-Net Bridge, growth in SA's retail trade sales at constant (2008) prices for August is expected to gain momentum to an increase of 4.9% year on year (y/y), from a y/y growth of 2.8% in July.

Forecasts among the seven economists ranged from 0.3% to 6.3%.

The National Treasury said it would auction R1bn worth of R203 bonds and R1.1bn worth of R207 bonds on October 25.

Foreigners were net sellers of R857.969m of South African bonds including repo transactions on Tuesday after net purchases of R236.865m of local bonds on Monday, data released by the JSE shows.

Nominal cumulative volume was R23.902bn on Tuesday from R13.546bn on Tuesday.

Foreigners were net sellers of R856.624m of South African bonds excluding repo transactions on Tuesday after net purchases of R234.851m of local bonds on Monday.

For the year to date, foreigners have been net buyers of R39.810bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn rand worth of local bonds, excluding repo transactions.

For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R31.546bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.
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