Bonds firm as global markets plummet

South African bonds were firmer late on Wednesday as the rand managed to make some gains and investors were looking for safe-haven investments‚ such as bonds.

Global markets fell substantially due to the continued fall in oil prices and global growth concerns.

At 3.36pm‚ the benchmark R186 was bid at 9.695% and offered at 9.680% from a Tuesday close of 9.730%.

The middle-dated R207 was bid at 9.235% and offered at 9.220% from a close of 9.250% previously.

The rand was trading at R16.7463 from R16.7847 previously.

Separately‚ at Tuesday’s auction‚ the Treasury placed R750m in R2037 bonds at a cover ratio of 3.2‚ R800m of R2044s at a cover ratio of 3.0 and R800m of R2048s at a cover ratio of 2.4. The ratios (above 2.0) indicate a successful auction comprising aggressive bids.

Meanwhile‚ as global markets tanked‚ US treasuries rallied on Wednesday morning‚ Dow Jones Newswires reported.

The yield on the benchmark 10-year note fell to levels last seen in April 2015‚ dropping to 1.953% in morning trade. The yield was last seen at 1.98%‚ still about an eight basis-points drop from Tuesday’s close.

Michael Cartine‚ a senior rates analyst with Thompson Reuters‚ said continuing uncertainty around the world was pushing the fixed-income bid‚ arising from‚ among others‚ China’s slowdown‚ the crashing oil price and uncertainty in the Middle East.

TMG Digital/BDlive