Bonds weaken as investors dump risk assets

Bonds weaken as investors dump risk assets

2012-05-07 19:06

Johannesburg - South African government bonds weakened on Monday as political uncertainty over Europe's austerity measures weighed on appetite for riskier assets around the globe.

Yields on the benchmark 2015 bond jumped five basis points to 6.425% and that on the 2026 issue up 5.5 basis points to 8.15%.

"We walked in this morning and saw that the euro is quite a bit softer on the back of the French election news and the Greek political news, which took a little bit of a shine off risk," said Daniel Sabiston, a bond dealer at Absa Capital.

In France, Socialist Francois Hollande won the presidential elections and has pledged to balance the budget, but more slowly than his opponent, ousted centre-right incumbent Nicolas Sarkozy.

The result could trigger a push-back against German-led austerity across the euro zone, unsettling investors.

Global equities were also hit, with South African stocks following suit. The benchmark Top 40 - (Tradeable) [JSE:J200] index slid 0.6% to 29 898.17.

The rand was trading at 7.8236 against the greenback at 14:06 GMT, little changed from Friday's close of 7.835.

The currency softened in the morning session in line with the euro, which was on the back foot against the greenback after elections in Greece and France put renewed fears on the progress austerity plans.

"The ZAR is still vulnerable to a stronger dollar and risk-off trading environment at the week's outset," said an Absa Capital in a client note.

"Which implies that importers might look to secure their short-term dollar commitments sooner rather that later,"

  • Freddy - 2012-05-07 21:43

    Do not ask the taxpayers for bailout. There isn't any!!

      bhekinkosi.silenje - 2012-05-10 22:57

      Well said Freddy

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