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Johannesburg - While some dis-inversion in the yield curve was evident, the entire South African bond curve was well in the
green on Wednesday as the rand pushed a little stronger.
By 15:43 the short-term government R153 bond was at 9.210% from its previous close of 9.425%. The medium-term R157 was at 8.710% from 8.860% at Tuesday's close and the long-term R186 was bid at 8.425% from 8.525% before.
The rand was last at R9.6657 per dollar from a previous close of R9.6998 and off worst intraday levels of 9.8190.
A local bond trader said the market had followed the vagaries of the rand as it initially strengthened earlier on the back of the rand, then weakened a little and has now improved again.
The dealer explained that there was a little bit of jostling around the curve, where the short end may have been bid up for some selling, but that the normalisation of the curve had held good.
However, the dealer, concluded, volatility is not expected to die down just yet.
While the Reserve Bank held its cards close to its chest at yesterday's monetary policy review briefing, giving little away as to what the likely direction of interest rates would be, Nedbank's Economics Unit feels rates will be left unchanged come December 11.
"While the Bank highlighted that the risks to the outlook remained 'amplified', the tone of the address seemed to suggest that unless something extremely untoward happened, the committee would continue to adopt a wait-and-see approach," said the economics unit.
They feel that key risks to the inflation outlook relate mainly to the uncertain global outlook, elevated inflation expectations and related high wage settlements, electricity, food and petrol prices, as well as the likely impact of the rand's recent weakness.
The bond dealer did note that some interest rate speculation may have led to some of the movements at different areas of the curve today.
Foreigners were net buyers of R1.645bn worth of South African
bonds on Tuesday after net sales of R183.621m worth of local
bonds on Monday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R166.641bn on Tuesday from
R39.778md on Monday.
- I-Net Bridge