Johannesburg - South African bonds were up to ten basis points firmer
in early trade on Monday in line with the stronger rand and improved global
risk appetite.
By 11:43 the
benchmark R157 bond was at 7.665% after closing at 7.750% on Friday and the
10-year R207 was bid at 8.480% from 8.580% previously. The long-term R186 was
bid at 8.745% from 8.830% at its previous close.
The rand was
bid at R7.3939 to the dollar from R7.4111 at its previous close.
"Bonds are
advancing on the back of rand gains as well as improved global risk appetite as
results of European stress tests on banks reassured investors," said
Nedbank Capital's bond experts.
The market is
also keenly anticipating this week's raft of key data, especially the CPI on
Wednesday as it could have interest rate implications.
A view exists that rates may be cut in September after
the unchanged stance in July. Lower CPI would go a long way to further solidify
this view.
Monday's economic
data includes June liquidations and insolvencies and April tourism and
migration stats.
Focus shifts to
the Q2 Quarterly Labour Force Survey (LFS) on Tuesday, which will be watched
closely after the previous survey showed a further 171 000 jobs were lost in
Q1.
The data is
followed on Wednesday by the June consumer price index and the June producer
price index on Thursday. Also on Thursday, the Sarb releases June M3 and PSCE
data and the Treasury releases the June statement of revenue, expenditure and
borrowing. Finally on Friday, Customs and Excise releases June trade data.
Moderating
goods price inflation is likely to remain the main driver behind the slowdown
in consumer prices, while administered prices are likely to continue to grow at
well above the Sarb's upper 6% target band, AbsaCapital analysts noted.
Private sector
credit extension figures released on Thursday are likely to continue to show
evidence of mild improvement after PSCE growth jumped into positive territory
in May for the first time in eight months, they added.
Foreigners were
net buyers of R4.333bn of South African bonds including repo
transactions on Friday, after net purchases of R51.918m of local
bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal
cumulative volume was R65.280bn on Friday from R71.294bn on Thursday.
Foreigners were
net buyers of R4.327bn of South African bonds excluding repo
transactions on Friday, after net sales of R57.093m of local bonds
on Thursday.
In the year to
date foreigners have been net buyers of R55.334bn worth of local
bonds, excluding repo transactions.
So far for
total transactions, including repo transactions, foreigners have been net
buyers of R54.878bn 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.
- I-Net Bridge