Johannesburg - South African bonds were between two and
three basis points softer in early trade on Friday as markets reacted belatedly
to the poor PPI data released on Thursday.
By
09:10 the benchmark R157 bond was at 7.620% after closing at 7.590% on Thursday
and the 10-year R207 was bid at 8.325% from 8.290% previously. The long-term
R186 was bid at 8.565% from 8.530% at its previous close.
The rand
was bid at R7.3211 to the dollar from R7.3196 at its previous close.
A local
trader said the market, after initially not reacting much to the much weaker
than expected producer inflation data at the time it was released, have now
digested the numbers and had weakened
The
consumer inflation data released Wednesday - which came in at 4.2% y/y from an
expected 4.5% y/y - had been welcomed and even sparked hopes in some quarters
of a potential rate cut in September.
"But the
PPI number really put the spanner in the inflation works," said the bond
trader.
"But
then the market has been very strong and has had a strong run to recent lows.
So maybe it was looking a bit oversold," he said.
South
Africa's PPI registered growth of 9.4% year-on-year (y/y) in June compared with
6.8% y/y in May, Statistics South Africa (Stats SA) data on Thursday showed.
The PPI increased 4.0% on a monthly basis after May's monthly increase of 0.2%.
The PPI
was expected to have reached 7.5% y/y, a survey by I-Net Bridge found.
Forecasts among the 10 leading economists surveyed ranged from 6.5% y/y to 8.6%
y/y.
The trader
added that trade data will be watched on the local front and US Q2 2101 GDP
data on the global front. The trade data is often erratic, but does sometimes
prompt a move in the rand, which could in turn filter through to bonds.
South
Africa's foreign trade balance with its non-Southern African Customs Union
trading partners is expected to have reached a R1.1bn deficit in June
from the R0.3bn deficit of May, according to a survey by I-Net
Bridge.
A record
R17.4bn deficit was set in January last year, but a few surprise
surpluses have been registered since then as export performance began to
improve, while the recession crimped back on imports.
Forecasts among the leading economists surveyed varied from a R3.0bn
deficit to a R0.6bn surplus.
"In
June, exports may be capped as the global economic recovery is seemingly losing
momentum," said one of the economists in the survey.
The
Customs and Excise Department is set to release the latest foreign trade data
at 14:00.
Foreigners
were net sellers of R4.240bn of South African bonds including repo
transactions on Thursday after net sales of R451.208m of local bonds
on Wednesday, Bond Exchange of South Africa statistics show.
Nominal
cumulative volume was R82.860bn on Thursday from R81.591bn on
Wednesday.
Foreigners
were net buyers of R1.492bn South African bonds excluding repo
transactions on Thursday after net sales of R585.222m of local
bonds on Wednesday.
In the year to
date foreigners have been net buyers of R55.583bn worth of local bonds,
excluding repo transactions.
So far for
total transactions, including repo transactions, foreigners have been net buyers of R48.340bn 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