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Johannesburg - South African bonds were up to 7 basis points firmer in midday trade on Thursday, which a trader said was as a result of a combination of the strong rand, producer price index (PPI) data and Wednesday's EU summit.
By 11:50, the benchmark R157 bond was at 6.600% from its previous close of 6.650%. The R207 was trading at 7.830% from a previous close of 7.900% and the R186 was trading at 8.290% from its close of 8.335%.
The rand was bid at 7.8208 against the dollar from its previous close of 7.9356.
"The rand looks much better - yesterday we were looking at R8/US$ and today we touched below R7.80/US$. The market likes the fact that there seems to be some broad agreement and a willingness from European leaders to come up with a solution. The details will follow though, and it will take time for them to rectify the issues," said a senior trader.
He added that the PPI figure "had helped".
Statistics SA said that the country's PPI registered growth of 10.5% year-on-year (y/y) in September from 9.6% y/y in August.
PPI was expected to have risen at 10.3% y/y in September from the 9.6% y/y seen in August, a survey by I-Net Bridge found. Forecasts among 10 leading economists surveyed ranged from 9.5% y/y to 12.1% y/y.
Carmen Altenkirch, an economist at Nedbank, said year-on-year increases in commodity prices and beneficiated metal products remained the main drivers of producer inflation.
"Over the month prices fell, largely due to the decline in electricity prices back to the summer tariff level. Producer inflation is expected to edge up over the coming months, but lower commodity prices in the months ahead as well as subdued global growth are expected to put downward pressure on prices next year.
"Deteriorating economic prospects will make businesses, both locally and abroad, reluctant to invest in additional capacity. This should contain price increases of manufactured goods as well as machinery," she said.
Foreigners were net buyers of R1.425bn of South African bonds including repo transactions on Wednesday after net sales of R890.826m of local bonds on Tuesday, data released by the JSE show.
Nominal cumulative volume was R49.497bn on Wednesday from R203.892bn on Tuesday.
Foreigners were net buyers of R1.424bn of South African bonds excluding repo transactions on Wednesday, after net sales of R892.067m of local bonds on Tuesday.
For the year to date, foreigners have been net buyers of R42.426bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R33.879bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.
By 11:50, the benchmark R157 bond was at 6.600% from its previous close of 6.650%. The R207 was trading at 7.830% from a previous close of 7.900% and the R186 was trading at 8.290% from its close of 8.335%.
The rand was bid at 7.8208 against the dollar from its previous close of 7.9356.
"The rand looks much better - yesterday we were looking at R8/US$ and today we touched below R7.80/US$. The market likes the fact that there seems to be some broad agreement and a willingness from European leaders to come up with a solution. The details will follow though, and it will take time for them to rectify the issues," said a senior trader.
He added that the PPI figure "had helped".
Statistics SA said that the country's PPI registered growth of 10.5% year-on-year (y/y) in September from 9.6% y/y in August.
PPI was expected to have risen at 10.3% y/y in September from the 9.6% y/y seen in August, a survey by I-Net Bridge found. Forecasts among 10 leading economists surveyed ranged from 9.5% y/y to 12.1% y/y.
Carmen Altenkirch, an economist at Nedbank, said year-on-year increases in commodity prices and beneficiated metal products remained the main drivers of producer inflation.
"Over the month prices fell, largely due to the decline in electricity prices back to the summer tariff level. Producer inflation is expected to edge up over the coming months, but lower commodity prices in the months ahead as well as subdued global growth are expected to put downward pressure on prices next year.
"Deteriorating economic prospects will make businesses, both locally and abroad, reluctant to invest in additional capacity. This should contain price increases of manufactured goods as well as machinery," she said.
Foreigners were net buyers of R1.425bn of South African bonds including repo transactions on Wednesday after net sales of R890.826m of local bonds on Tuesday, data released by the JSE show.
Nominal cumulative volume was R49.497bn on Wednesday from R203.892bn on Tuesday.
Foreigners were net buyers of R1.424bn of South African bonds excluding repo transactions on Wednesday, after net sales of R892.067m of local bonds on Tuesday.
For the year to date, foreigners have been net buyers of R42.426bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R33.879bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.
