Johannesburg - South African bonds gained for a third day, driving yields to the lowest in more than four months, after Federal Reserve officials signaled a delay in reducing stimulus. The rand fluctuated between gains and losses.
Chicago Fed President Charles Evans said yesterday the central bank should not begin reducing the pace of its $85-billion of monthly asset purchases as data used to gauge the economy’s health stopped during the government shutdown. Narayana Kocherlakota, Minneapolis Fed president, said in a separate speech policy makers should maintain low interest rates to reduce unemployment. Foreign investors bought a net R1.46-billion of South African bonds yesterday, the most in three weeks, data compiled by Bloomberg show.
“The mood in global markets remains euphoric,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in an e-mail. “The end of the US fiscal impasse has resulted in foreigners flocking into local bonds.”
Yields on benchmark 10.5 percent bonds due December 2026 dropped six basis points, or 0.06 percentage point, to 7.73 percent as of 10:07 a.m. in Johannesburg. A close at that level would be the lowest since June 5. The yields are down 14 basis points the past five days, a second week of declines. The rand depreciated 0.3 percent to 9.8510 per dollar, paring a weekly gain of 0.4 percent, the third in succession. The currency retreated after gaining as much as 0.1 percent earlier.
The Bloomberg US Dollar Index reached an eight-month low after a deal by Congress extended funding and debt-limit deadlines into next year and ended a partial government shutdown, spurring demand for higher-yielding assets. - Bloomberg