Bonds weaker on softer rand

South African bonds tracked the rand weaker on Thursday morning‚ as market focus briefly shifted away from local politics.

The rand’s recent moves have been dictated by political sentiment as the market has priced in the prospects of Cyril Ramaphosa becoming the ANC’s next leader.

The rally stalled on Wednesday but volatility in the currency is expected to return next week‚ ahead of the ANC’s national elective conference.

The rand was trading around R13.53/$ in early trade‚ but weakened just after the market opened.

TreasuryOne dealer Andre Botha said that‚ with the rand failing to strengthen‚ it could be assumed that the momentum of notable rand strength had broken.

Foreign investors sold R1.32bn of local bonds on Wednesday with trading volumes and liquidity at thin levels‚ Nedbank analysts said.

Global market focus is now on the US nonfarm payroll data due on Friday. The data will shed light on whether the Federal Reserve will increase interest rates in December.

US legislators are making progress with the tax legislation bill‚ which has provided support for the dollar. This has put pressure on safe-haven assets like US treasuries.

At 9.05 the R186 government bond was bid at 9.20% from 9.16% and the R207 at 8.05% from 8.02%.

US 10-year treasuries were bid at 2.3447% from 2.3518%.

The rand was at R13.56/$ from R13.51/$.


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