South African bonds were off their worst levels in late afternoon trade on Wednesday after reacting positively to the inflation results announced earlier in the day.
By 15:20 the short-term government R153 bond was at 9.720% from its previous close of 9.910%. The medium-term R157 was at 9.110% from 9.285% at the previous close. The long-term R186 was bid at 8.890% from its previous close of 9.035%.
"Bonds reacted very positively to the inflation data and are slightly off their lowest levels," a bond trader said.
The rand was last bid at 7.7656 per US dollar from its overnight close of 7.8025.
"The currency hasn’t been doing much, but overall, bonds were stronger for the day," concluded the trader.
Today’s increase in South Africa’s consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank for its inflation target, was up 13.0% year-on-year (y/y) in July from 11.6% y/y in June, Statistics South Africa said on Wednesday.
This is the sixteenth month running that CPIX has been above the 6% upper target limit. The previous all-time high before June this year for CPIX was the 11.3% set in 2002.
Headline consumer prices - the 12-month rate of change in the consumer price index (CPI) for metropolitan areas - was up 13.4% y/y in July from a 12.2% y/y increase in June.
The core inflation rate, which excludes volatile foods, municipal rates and monetary policy changes, was up 13.7% y/y in July from 12.0% y/y in June.
CPIX was expected at 12.9%, an I-Net Bridge survey found, with forecasts ranging from 11.2% to 13.5% and from just 6.5% a year ago.
Headline CPI was expected to have increased by a whopping 13.6% from just 7% a year ago.
Forecasts for CPI ranged from 12.1% to 14.1%.
Foreigners were net sellers of 501.564 million rand worth of South African bonds on Tuesday after net sales of 59.378 million rand worth of local bonds on Monday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was 134.521 billion rand on Tuesday from 32.571 billion rand on Monday. |
