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Bonds weaker ahead of auction

Nov 13 2012 09:17
I-Net Bridge
Johannesburg - The South African bond market weakened on Tuesday morning as an underperforming rand added to the pressure on bond traders ahead of the auction.

“Domestic bonds were steady with a weaker bias in quiet trade yesterday. The curve flattened with the most pressure in yields at the shorter end. The yield on the R157 rose two basis points and that on the longer-dated benchmark R186 was up one basis point on the day‚” Absa Capital said in a note.

At 08:27 the benchmark R186 was bid at 7.635% and offered at 7.610% from Monday’s close of 7.610%. The R157 was bid at 5.490% and offered at 5.475% from its previous close of 5.470%. The R207 was bid at 6.470% and offered at 6.445%‚ from its previous close of 6.445%.

The rand was bid at R8.7599/$ from Monday’s close of R8.7483.

“The weaker bias might have been due to the weaker rand‚ and some pre-positioning ahead of the auction today‚” Absa Capital said.

“We expect that domestic bonds will follow trends in US Treasuries in the days ahead. Ongoing concern about the resolution of the fiscal cliff could see the Treasury curve continue to flatten‚ which could push the domestic curve flatter.”

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