Johannesburg - South African bonds were weaker in midday trade on Monday, mainly in line with the weaker rand.
By 11:55, the benchmark R157 bond was trading at 7.735% from 7.720% at the previous close. The R207 was bid at 8.505% and offered at 8.475% from 8.470%. The R186 was trading at 8.735% and offered at 8.720% from its previous close of 8.670%.
The rand was bid at 7.0036 to the dollar from its previous close of 7.0154.
"This is more of the same from Friday - where we were up quite a bit, on the back of the rand and concern about the Wal-Mart deal and land claims coming into the game. The rand has been under a bit of pressure. We saw quite a bit of Reserve Bank intervention as well last week. All this has taken the rand above some technical levels and that's causing bonds to weaken as well," a local trader said.
"Trading will be tricky this week. The consumer price index (CPI) has tended to surprise on the upside in the last while, which is a concern. On the other hand, foreigners keep buying, even though we sold off quite a bit on Friday," he added.
The main event of the week will be the release of April's CPI by Stats SA on Tuesday, while local markets are closed on Wednesday for voting in the local government elections.
The consumer inflation index - the measure used by the SA Reserve Bank for its inflation target - is expected to tick up to 4.4% year on year (y/y) in April from 4.1% y/y in March, according to a survey of leading economists by I-Net Bridge.
Forecasts among the nine economists ranged from 4.4% to 4.6%.
Standard Bank analysts said in a report that an interrupted week would encourage non-committal trading.
"With the local elections on Wednesday, trading could prove more restrained than normal over the week. Not in relation to the elections themselves, but merely because of the accompanying public holiday discouraging short-term position building," the analysts said.
They added that Tuesday's local data flow would be significant, as April's CPI would be the last retail sales report for the first quarter of 2011.
"Local rates are anticipated to remain within the well-worn ranges of this year in the short term, relegating the early part of this month's trading as a temporary exception, rather than a change in outlook," Standard Bank said.
Foreigners were net buyers of R901.634m of South African bonds including repo transactions on Friday after net purchases of R917.793m of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R68.568bn on Friday from R58.736bn on Thursday.
Foreigners were net buyers of R899.966m of South African bonds excluding repo transactions on Friday after net purchases of R916.808m of local bonds on Thursday.
For the year to date, foreigners have been net buyers of R19.966bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R12.138bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.
By 11:55, the benchmark R157 bond was trading at 7.735% from 7.720% at the previous close. The R207 was bid at 8.505% and offered at 8.475% from 8.470%. The R186 was trading at 8.735% and offered at 8.720% from its previous close of 8.670%.
The rand was bid at 7.0036 to the dollar from its previous close of 7.0154.
"This is more of the same from Friday - where we were up quite a bit, on the back of the rand and concern about the Wal-Mart deal and land claims coming into the game. The rand has been under a bit of pressure. We saw quite a bit of Reserve Bank intervention as well last week. All this has taken the rand above some technical levels and that's causing bonds to weaken as well," a local trader said.
"Trading will be tricky this week. The consumer price index (CPI) has tended to surprise on the upside in the last while, which is a concern. On the other hand, foreigners keep buying, even though we sold off quite a bit on Friday," he added.
The main event of the week will be the release of April's CPI by Stats SA on Tuesday, while local markets are closed on Wednesday for voting in the local government elections.
The consumer inflation index - the measure used by the SA Reserve Bank for its inflation target - is expected to tick up to 4.4% year on year (y/y) in April from 4.1% y/y in March, according to a survey of leading economists by I-Net Bridge.
Forecasts among the nine economists ranged from 4.4% to 4.6%.
Standard Bank analysts said in a report that an interrupted week would encourage non-committal trading.
"With the local elections on Wednesday, trading could prove more restrained than normal over the week. Not in relation to the elections themselves, but merely because of the accompanying public holiday discouraging short-term position building," the analysts said.
They added that Tuesday's local data flow would be significant, as April's CPI would be the last retail sales report for the first quarter of 2011.
"Local rates are anticipated to remain within the well-worn ranges of this year in the short term, relegating the early part of this month's trading as a temporary exception, rather than a change in outlook," Standard Bank said.
Foreigners were net buyers of R901.634m of South African bonds including repo transactions on Friday after net purchases of R917.793m of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R68.568bn on Friday from R58.736bn on Thursday.
Foreigners were net buyers of R899.966m of South African bonds excluding repo transactions on Friday after net purchases of R916.808m of local bonds on Thursday.
For the year to date, foreigners have been net buyers of R19.966bn worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064bn worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R12.138bn of local bonds. In 2010 they bought net R44.541bn worth of bonds.