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Johannesburg - Bonds gained up to nine basis points during the morning session on Friday on some short covering and a few bullish views on the expected inflation decline.
"Essentially we sold off too far yesterday," explained a senior Johannesburg-based bond dealer.
By 11:54 the short-term government R153 bond was at 7.500% from its previous close of 7.545%. The medium-term R157 was at 7.495% from a previous 7.580%, while the long-term R186 was bid at 7.520% from 7.610%.
The rand was last at R9.6961 to the dollar from a previous close of R9.6341.
"There may be a bit of short covering and a long or two trying to squeeze the market lower [stronger]," said a senior bond dealer.
He added that some investors may be getting bullish over the new CPI re-weightings this year that are expected to be a factor in bringing the headline numbers down, together with slowing demand.
This data becomes available on February 25 when the January CPI is released.
The dealer said, however, that the market was "getting expensive" at below 7.50% on the R157 bond.
Foreigners were net buyers of R323.076m worth of bonds on Thursday after net sales of R4.233bn worth of local bonds on Wednesday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R36.978bn on Thursday from
R37.949bn on Wednesday.
- I-Net Bridge