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Johannesburg -
Bonds
recovered up to 15 basis points in
early trade on Monday after a massive European Union package was announced to
stabilise the euro and ease debt concerns.
By 09:00 the short-term government R154 bond was bid at 6.920% and offered at 6.900% after closing at 7.060% on Friday and the medium-term R157 was at 8.150% from 8.300% at its previous close. The long-term R186 was bid at 9.030% and offered at 9.010% from 9.150% previously.
The rand was bid at R7.5202 to the dollar from R7.5850 at its previous close. This marks a strong recovery in the rand, which was bid as high as R7.84 at one stage on Friday.
A local bond trader said receding risk aversion after the EU reached a deal has helped the local bond market. All eyes would remain on global markets, as they would set the trend for the day, he added.
Dow Jones Newswires reports that the European Central Bank made a stunning U-turn in the early hours Monday, saying it will intervene in the eurozone's public and private debt markets, among other things.
The move is aimed to "ensure depth and liquidity in those market segments which are dysfunctional," the ECB said in a snap statement.
Financial markets moved higher on the announcement, which came within one hour after eurozone finance ministers said they created a €500bn support plan for countries facing financial meltdown.
The money would be available to rescue eurozone economies that get into financial troubles, finance ministers said. The plan would consist of €440bn of loans from eurozone governments, €60bn from an EU emergency fund, plus €250bn from the IMF, diplomats and ministers said.
As for the ECB's own plan, it said, "The objective of this programme is to address the malfunctioning of securities markets and restore an appropriate monetary policy transmission mechanism." It insisted the move won't affect its policy stance.
"In order to sterilise the impact of the above interventions, specific operations will be conducted to reabsorb the liquidity injected through the Securities Markets Programme," the ECB said.
The eurozone news "certainly looks to be having a positive effect on investor confidence," according to Ben Potter, analyst at IG Markets.
"The European bailout package for Greece is unparalleled in size and could help inject a little more risk appetite back into the trader mindset, although with equities having looked overbought for some time now, the movement of the last week or so could be seen as the long overdue correction in turn limiting
scope for a quick rebound."
"It's positive," said Macquarie Private Wealth Division Director, Martin Lakos in Sydney. "Although difficult, this was always going to be managed and it would appear that this package will well satisfy markets and support the euro. It was always going to have a positive reaction on markets that were
extremely oversold."
IMF Managing Director Dominique Strauss-Kahn said the IMF was "ready to support our European members' individual adjustment and recovery programmes through the design and monitoring of economic measures as well as through financial assistance, when requested."
Armando Guglielmetti, senior market strategist at InvestNews.ch in Switzerland, looks for the EU/IMF deal, backed by major central banks, to at least stabilise the stock markets and more likely to lead to a bumpy recovery.
Foreigners were net sellers of R2.411bn of bonds including repo transactions on Friday after net sales of R327.585m of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R33.035bn on Friday from R68.232bn on Thursday.
Foreigners were net sellers of R2.411bn of bonds excluding repo transactions on Friday after net sales of R330.157m of local bonds on Thursday.
In the year to date foreigners have been net buyers of R28.103bn worth of local bonds, excluding repo transactions.
So far for total transactions, including repo transactions, foreigners have been net buyers of R24.748bn 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
By 09:00 the short-term government R154 bond was bid at 6.920% and offered at 6.900% after closing at 7.060% on Friday and the medium-term R157 was at 8.150% from 8.300% at its previous close. The long-term R186 was bid at 9.030% and offered at 9.010% from 9.150% previously.
The rand was bid at R7.5202 to the dollar from R7.5850 at its previous close. This marks a strong recovery in the rand, which was bid as high as R7.84 at one stage on Friday.
A local bond trader said receding risk aversion after the EU reached a deal has helped the local bond market. All eyes would remain on global markets, as they would set the trend for the day, he added.
Dow Jones Newswires reports that the European Central Bank made a stunning U-turn in the early hours Monday, saying it will intervene in the eurozone's public and private debt markets, among other things.
The move is aimed to "ensure depth and liquidity in those market segments which are dysfunctional," the ECB said in a snap statement.
Financial markets moved higher on the announcement, which came within one hour after eurozone finance ministers said they created a €500bn support plan for countries facing financial meltdown.
The money would be available to rescue eurozone economies that get into financial troubles, finance ministers said. The plan would consist of €440bn of loans from eurozone governments, €60bn from an EU emergency fund, plus €250bn from the IMF, diplomats and ministers said.
As for the ECB's own plan, it said, "The objective of this programme is to address the malfunctioning of securities markets and restore an appropriate monetary policy transmission mechanism." It insisted the move won't affect its policy stance.
"In order to sterilise the impact of the above interventions, specific operations will be conducted to reabsorb the liquidity injected through the Securities Markets Programme," the ECB said.
The eurozone news "certainly looks to be having a positive effect on investor confidence," according to Ben Potter, analyst at IG Markets.
"The European bailout package for Greece is unparalleled in size and could help inject a little more risk appetite back into the trader mindset, although with equities having looked overbought for some time now, the movement of the last week or so could be seen as the long overdue correction in turn limiting
scope for a quick rebound."
"It's positive," said Macquarie Private Wealth Division Director, Martin Lakos in Sydney. "Although difficult, this was always going to be managed and it would appear that this package will well satisfy markets and support the euro. It was always going to have a positive reaction on markets that were
extremely oversold."
IMF Managing Director Dominique Strauss-Kahn said the IMF was "ready to support our European members' individual adjustment and recovery programmes through the design and monitoring of economic measures as well as through financial assistance, when requested."
Armando Guglielmetti, senior market strategist at InvestNews.ch in Switzerland, looks for the EU/IMF deal, backed by major central banks, to at least stabilise the stock markets and more likely to lead to a bumpy recovery.
Foreigners were net sellers of R2.411bn of bonds including repo transactions on Friday after net sales of R327.585m of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R33.035bn on Friday from R68.232bn on Thursday.
Foreigners were net sellers of R2.411bn of bonds excluding repo transactions on Friday after net sales of R330.157m of local bonds on Thursday.
In the year to date foreigners have been net buyers of R28.103bn worth of local bonds, excluding repo transactions.
So far for total transactions, including repo transactions, foreigners have been net buyers of R24.748bn 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
