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Johannesburg - The South African bond market was firm in afternoon trade on Friday after US Treasuries gained following their week-long rout.
“US Treasuries have boosted our market‚ but bond markets globally remain nervous‚” a local bond trader said.
At 15:40 the benchmark R186 bond was trading at 8.220% after reaching a best level of 8.120% from 8.260% at Thursday’s close. The R157 was trading at 6.405% from 6.455% previously and the R207 was trading at 7.570% from 7.650% at its previous close.
The rand was bid at R10.1851/$ from R10.2181/$ at Thursday’s close.
Dow Jones Newswires reported that the US bond market found its footing on Friday as buyers tiptoed back in to take advantage of a week-long rout that brought the 10-year yield to its highest mark in 22 months.
In early New York trading‚ benchmark 10-year notes rose 7/32 to yield 2.392% on Tradeweb in what would be the market's first daily gain this week. The 30-year bond rose 22/32 to yield 3.474%. Bond yields fall when prices rise.
With these gains‚ however‚ the market is still poised to post its biggest one-week selloff since March last year. The 10-year yield has risen about 0.25 percentage points this week.
US Treasuries are at the centre of a global shift as investors prepare for a financial marketplace with reduced monetary support from the Federal Reserve.
Selling across bonds started in May when expectations rose that the Fed might cut down its stimulus programme later this year. The central bank confirmed these fears on Wednesday‚ when the policy board delivered a rosier outlook on the US economy and suggested that less cheap-money support could be warranted by autumn.
The prospect of less bond buying by the Fed fuelled heavy selling across bond markets‚ safe and risky‚ and prompted investors to pull money out of bond funds. The latest flow estimates from the Investment Company Institute showed $13.5bn withdrawn from bond funds in the week ended June 12‚ on top of a $10.8bn outflow the week before. Combined‚ these redemptions mark the biggest set of two-week outflows from bond funds since the height of the financial crisis in October 2008.
Bond managers say such outflows have made it more difficult to put money to work. Indeed‚ traders describe Friday's buying as hesitant‚ as investors find Treasuries more appealing at these higher yields‚ but fear a further sell-off.
Resurfacing concerns about Europe's debt crisis could also strengthen support for safe-haven Treasuries. Greece is hitting some nerves again as its Democratic Left announced it will withdraw from the government‚ raising concerns about the country's political stability and ability to meet the requirements needed for financial aid.
Greek government bonds‚ which were one of the best-performing assets last quarter‚ have sold off in the wake of these troubles and the Fed's looming pullback. The yield on 10-year Greek bonds rose 0.62 percentage points on Friday‚ to 11.32%.
“US Treasuries have boosted our market‚ but bond markets globally remain nervous‚” a local bond trader said.
At 15:40 the benchmark R186 bond was trading at 8.220% after reaching a best level of 8.120% from 8.260% at Thursday’s close. The R157 was trading at 6.405% from 6.455% previously and the R207 was trading at 7.570% from 7.650% at its previous close.
The rand was bid at R10.1851/$ from R10.2181/$ at Thursday’s close.
Dow Jones Newswires reported that the US bond market found its footing on Friday as buyers tiptoed back in to take advantage of a week-long rout that brought the 10-year yield to its highest mark in 22 months.
In early New York trading‚ benchmark 10-year notes rose 7/32 to yield 2.392% on Tradeweb in what would be the market's first daily gain this week. The 30-year bond rose 22/32 to yield 3.474%. Bond yields fall when prices rise.
With these gains‚ however‚ the market is still poised to post its biggest one-week selloff since March last year. The 10-year yield has risen about 0.25 percentage points this week.
US Treasuries are at the centre of a global shift as investors prepare for a financial marketplace with reduced monetary support from the Federal Reserve.
Selling across bonds started in May when expectations rose that the Fed might cut down its stimulus programme later this year. The central bank confirmed these fears on Wednesday‚ when the policy board delivered a rosier outlook on the US economy and suggested that less cheap-money support could be warranted by autumn.
The prospect of less bond buying by the Fed fuelled heavy selling across bond markets‚ safe and risky‚ and prompted investors to pull money out of bond funds. The latest flow estimates from the Investment Company Institute showed $13.5bn withdrawn from bond funds in the week ended June 12‚ on top of a $10.8bn outflow the week before. Combined‚ these redemptions mark the biggest set of two-week outflows from bond funds since the height of the financial crisis in October 2008.
Bond managers say such outflows have made it more difficult to put money to work. Indeed‚ traders describe Friday's buying as hesitant‚ as investors find Treasuries more appealing at these higher yields‚ but fear a further sell-off.
Resurfacing concerns about Europe's debt crisis could also strengthen support for safe-haven Treasuries. Greece is hitting some nerves again as its Democratic Left announced it will withdraw from the government‚ raising concerns about the country's political stability and ability to meet the requirements needed for financial aid.
Greek government bonds‚ which were one of the best-performing assets last quarter‚ have sold off in the wake of these troubles and the Fed's looming pullback. The yield on 10-year Greek bonds rose 0.62 percentage points on Friday‚ to 11.32%.
