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Johannesburg - South African bonds traded near record highs on Wednesday, supported by signs of weak global growth that could cause investors to shift money into higher yielding emerging markets.
The rand broke through resistance of R9.20/$ to trade at its strongest levels so far in this week. However, dealers expect it will struggle to make significant gains.
The yield on the 2026 benchmark bond was at 6.79%, not far off a record 6.77% hit in the previous session.
The 2015 yield, a benchmark for the front end of the curve, traded at 5.225%, 2.5 basis points off a two-month low of 5.20% touched on Tuesday.
The rand which has failed to make a convincing break through R9.30 support levels, rebounded to R9.1851 early on Wednesday, a level last seen on Friday.
"The rand has been supported by bond inflows, but with the euro expected to remain under pressure on ECB rate cut speculation, the rand may struggle to see a major upside, especially as domestic fundamentals are not supportive of gains," said Christopher Shiells of Informa Global Markets.
The rand has come under pressure on worries that state utility Eskom may have to resort to rolling blackouts to prevent a crisis in a power supply operating on razor-thin margins.
A power crisis in 2008 caused mines and factories to shut, costing Africa's biggest economy billions of dollars in lost output.
