Good news on current-account deficit boosts bonds
Bonds were firmer at midday on Tuesday after the Reserve Bank signalled that the current-account deficit had narrowed more than expected in the second quarter. SA’s current account deficit narrowed sharply to R134bn‚ or 3.1% of GDP‚ in the second quarter‚ from a slightly upwardly revised R221bn or 5.3% in the first quarter‚ the Bank’s Quarterly Bulletin showed on Tuesday. Consensus was for a 3.6% deficit.At 11.26am‚ the benchmark R186 bond was bid at 8.670% and offered at 8.650% from 8.730% previously. The R207 was bid at 8.925% and offered at 7.910% from 7.985% previously.The rand was at R14.2844 to the dollar from R14.2239 previously.Emerging-market bonds‚ including SA’s R186 and Russia’s 10-year note‚ had been under pressure earlier on speculation that dovish US Federal Reserve governor Lael Brainard would adopt a hawkish stance when she spoke on Monday ahead of next week’s US interest-rate decision‚ NKC Research analysts said.But Brainard proved them wrong‚ and bonds began to ease after her speech.- TMG Digital/BDlive..
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