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Johannesburg - South Africa's government bonds weakened sharply on Monday and the rand fell against the dollar as investors continued to pull out of emerging markets on expectations the US Federal Reserve will cut back on its policy easing.
The yield on the benchmark bond due in 2026 climbed 6.5 basis points to 8.29% in early trade while the paper due in 2015 jumped 18.5 basis points to 6.61%.
Emerging markets have sold off heavily after Federal Reserve Chairman Ben Bernanke said last week the U.S. central bank could soon start scaling down its monthly $85bn in asset purchases.
"US Treasuries weakened substantially from Friday and have extended their losses this morning. Emerging markets are taking their cue from that," said Renaissance Capital bond trader Alvin Chawasema.
"On Friday foreigners were net sellers of about R2.2bn worth of our bonds, so we are seeing the evidence that offshore accounts are selling emerging markets."
The rand was also on the back foot on Monday, falling nearly 1.3% against the dollar to R10.2898 by 08:50.
The yield on the benchmark bond due in 2026 climbed 6.5 basis points to 8.29% in early trade while the paper due in 2015 jumped 18.5 basis points to 6.61%.
Emerging markets have sold off heavily after Federal Reserve Chairman Ben Bernanke said last week the U.S. central bank could soon start scaling down its monthly $85bn in asset purchases.
"US Treasuries weakened substantially from Friday and have extended their losses this morning. Emerging markets are taking their cue from that," said Renaissance Capital bond trader Alvin Chawasema.
"On Friday foreigners were net sellers of about R2.2bn worth of our bonds, so we are seeing the evidence that offshore accounts are selling emerging markets."
The rand was also on the back foot on Monday, falling nearly 1.3% against the dollar to R10.2898 by 08:50.
