Johannesburg - Bonds extended losses on Thursday as the
market doubted that Finance Minister Pravin Gordhan’s narrower budget deficit
forecasts were achievable.
The rand was slightly firmer but has been trapped in ranges,
lacking momentum to move outside familiar levels.
The National Treasury on Wednesday tabled a narrowe- than-expected budget deficit of 4.6% of gross domestic product in the financial year
ending March 2013, from a 4.8% shortfall in 2011/12.
Bonds initially gained after that announcement but later reversed those gains on closer analysis of the numbers.
“There is a bit of scepticism about the revenue on the
budget; some quarters of the market are saying maybe the reductions in the
budget may be too quick and probably too large as well,” said a bond dealer in
Johannesburg.
The yield on the 2015 bond was up three basis points to
6.645% and that on the 2026 issue went up 3.5 basis points to 8.29%.
The rand was trading at R7.71 against the dollar at 06:40
GMT, a tad firmer than Wednesday’s New York close of R7.7350. But dealers don’t
expected significant gains in the session on the back of lower global market
and softer commodities.
“The rand is unlikely to prosper against such a backdrop.
Also, given recent history, the rand is unlikely to have much of a reaction to
PPI data,” said Standard Bank in a note.
Producer price index data will be released at 09:30 GMT, with the market
expecting it to slow at 9.5% year-on-year from 9.8% in December.
On the bourse, stocks futures pointed to a flat start on the at 07:00 GMT, with the JSE's blue chip Top 40 - (Tradeable) [JSE:J200] March futures contract inching up 0.07% before the start of trade.