Bonds firm as rand continues to strengthen

South African bonds were firmer late on Monday in line with a stronger rand that has gained strength from recent oversold positions.

Investors are now awaiting local consumer price index data due out on Wednesday for further market direction.

Next week’s much-anticipated budget speech is also in focus.

At 3.18am‚ the benchmark R186 bond was bid at 9.135% and offered at 9.115% from Friday’s close of 9.230%.

The middle-dated R207 was bid at 8.620% and offered at 8.615% from a close of 8.715%.

Separately‚ Barclays Research analysts said although the rand had managed to consolidate its recent gains and domestic policy rate increase expectations continued to fall‚ SA’s government bonds fell victim to a "tepid" weekly auction and a more risk-off global trading environment on Friday.

Foreigners sold R3bn worth of SA government bonds last week and were particularly severe on the R186 (10-year) benchmark yield.

Consequently‚ foreign investors have now sold R300m worth of SA government bonds this month and R500m year-to-date.

For the first time this month the Treasury was able to place a full R650m worth of inflation-linked bonds at last Friday’s linker auction‚ but the appetite for linker scrip "remains subdued"‚ Barclays said.

TMG Digital/BDlive