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Johannesburg - South African government bonds are expected to hold firm on Tuesday, with yields close to historic lows, and the rand is seen stronger against the dollar, backed by a weak greenback globally.
Investors piled into the bond market in the previous session, pushing the benchmark 13-year paper's yield down to six-month lows.
The yield was down 0.8 basis points to 7.100% at 06:55 GMT, while the three-year bond gained 0.2 basis points to 5.315%.
"Sentiment is looking relatively rosy and there's all likelihood of continued demand for government bonds in the short term," said Steve Arnold, a bond trader at Investec.
Demand at a primary auction on Tuesday is also expected to be high. The Treasury is scheduled to auction over R2bn in government bonds.
The rand was marginally weaker by 06:42 GMT, down 0.32% to R8.7240.
"Although we still expect the rand to underperform relative to its emerging market and commodity-based currency peers in the near term due to ongoing domestic labour tensions, we also believe that the rand could manage to recoup some lost ground if the dollar continues to weaken," Absa Capital said in a note.
The dollar is on the back foot globally because risk-taking investors around the world are becoming bolder.
However, labour unrest in South Africa's farming and mining sectors are weighing on the local currency as both gold and platinum producers say they have to let thousands of jobs go.
Mining data expected on Tuesday is expected to show a slight improvement from the 7.7% decline in output reported in October.
