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Bonds stay weak ahead of NFP

Johannesburg – Bonds remained weak in midday trade on Friday despite a stronger rand as investors waited for the US non-farm payrolls (NFP) data due at 14:30 local time.

The National Treasury auctioned a total of R800m nominal inflation-linked bonds spread between I2025s‚ I2038s and I2050s.

It allotted R215m of I2025 bonds at a clearing yield of 1.530%‚ R230m of I2038 bonds at a clearing yield of 2.070% and R355m for the I2050 bonds at a clearing yield of 2.130%. The bids amounted to R525m‚ R850m and R705m respectively.

“The ILB auction was well bid‚ but the bond market will be under pressure if the US non-farm payrolls data comes out better than expected‚ so investors are being cautious‚” a local bond trader said.

At 11:44‚ the benchmark R157 bond was trading at 5.430% from 5.395% at Thursday’s close. The R207 was bid at 6.470% and offered at 6.460% from Thursday’s close of 6.440%‚ and the R186 was trading at 7.360% from 7.335% previously.

The rand was bid at R8.2378 per dollar from Thursday’s close of R8.2996 and Wednesday’s close of R8.3919.

Dow Jones Newswires reported that US weekly jobless claims released on Thursday posted a fall for the first time in four weeks‚ while a monthly survey from payroll firm Automatic Data Processing Inc and consultancy Macroeconomic Advisers showed the private sector created a better-than-expected 201 000 jobs in August.

These data boded well for the US August jobs report later in the day‚ which could serve as a gauge of additional easing stimulus by the Federal Reserve later this month.

Thursday's data have also prompted the market to raise their forecasts for non-farm payroll growth to 150 000-160 000‚ said Yuji Saito‚ director of foreign exchange at Credit Agricole Bank in Tokyo.

Economists polled by Dow Jones had expected an increase of 125 000 jobs.

The Greek economy contracted at a faster pace than estimated‚ confirming the country remains mired in recession as government spending and exports both fell‚ data from Greek statistics agency Elstat showed on Friday.

Greek gross domestic product contracted 6.3% on the year in the second quarter. That is a revision from the 6.2% drop reported in the provisional estimate last month and compares with a 6.5% fall in the first quarter and a contraction of 7.3% in the second quarter of 2011.

Foreigners bought a net R931.343m SA bonds including repo transactions on Thursday after net purchases of R1.212bn of local bonds on Wednesday‚ data released by the JSE shows.

Nominal cumulative volume was R58.701bn on Thursday from R48.237bn on Wednesday.

Foreigners were net buyers of R881.230m of local bonds excluding repo transactions on Thursday after net purchases of R1.264bn of local bonds on Wednesday.

For the year to date foreigners have been net buyers of R72.444bn of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359bn worth of local bonds‚ excluding repo transactions.

In the year to date foreigners have been net buyers of R72.278bn of local bonds including repo transactions. In 2011 they bought R37.501bn worth of local bonds.
 
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