South African bonds drifted easier in quiet midday trade on Friday on the back of a softer rand‚ but traders said few people wanted to take large positions ahead the US non-farm payroll (NFP) data release at 14:30.
“We have just drifted easier on the back of the softer rand. We could see a further sell-off if the US NFP data is better than expected‚” a local trader said.
The Treasury at 11:00 allotted R200 million in its new I2050 inflation-linked bonds‚ which attracted bids worth R630 million. It also allotted R420 million worth of the I2025‚ which attracted bids worth R1.315 billion and allotted R180 million of I2038‚ which attracted bids worth R495 million.
At 12:00‚ the benchmark R157 bond was trading at 5.930% from Thursday's close of 5.900% and Wednesday's close of 5.930%. The R207 was bid at 7.010% and offered at 6.985% from a previous close of 6.940% and the R186 was trading at 7.855% from its previous close of 7.785%.
At the end of May the R157 closed at 6.390%‚ the R207 at 7.645% and the R186 at 8.375%.
The rand was bid at R8.2114 against the dollar from Thursday's close of R8.1347 and Wednesday's close of R8.1304.
Dow Jones Newswires said the prices charged by UK manufacturers fell at the steepest month-to-month rate in three-and-a-half years in June‚ giving a strong signal that headline UK inflation will fall further in the coming months.
Producer output prices fell 0.4% in June from May‚ the biggest drop since November 2008‚ the Office for National Statistics said Friday. That left annual inflation at the factory gate at 2.3%‚ down from 2.9% in May and the lowest rate since October 2009.
The drop in producer prices could be replicated in consumer prices - the Bank of England's (BoE) preferred inflation measure -if retailers opt to pass the savings on to shoppers.
Falling inflation would give the BoE more scope to ease monetary policy to support growth. The BoE on Thursday voted to pump a further GBP50 billion ($77.8 billion) into the economy as part of its stimulus programme of asset purchases known as quantitative easing.
Foreigners were net buyers of R481.256 million of South African bonds including repo transactions on Thursday after net sales of R109.114 million of local bonds on Wednesday‚ data released by the JSE show.
Nominal cumulative volume was R46.461 billion on Thursday from R71.014 billion on Wednesday.
Foreigners were net buyers of R1.214 billion South African bonds excluding repo transactions on Thursday after net sales of R424.079 million of local bonds on Wednesday.
For the year to date foreigners have been net buyers of R53.563 billion of local bonds‚ excluding repo transactions. In 2011 they were net buyers of R47.359 billion worth of local bonds‚ excluding repo transactions.
In the year to date foreigners have been net buyers of R51.615 billion of local bonds including repo transactions. In 2011 they bought R37.501 billion worth of local bonds. I-Net Bridge News
12:00 local time Range so far Previous close
R157 (2016) 5.930% 5.915% - 5.960% 5.900%
R207 (2020) 7.010% bid 6.960% - 7.010% 6.940%
R186 (2026) 7.855% 7.805% - 7.855% 7.785%
Bond Exchange of South Africa (in billions of rand)
Nominal cumulative volume R71.014 R46.461
Net foreign purchases/(sales) (R0.109) R0.481
Net foreign purchases/(sales) in 2012: R51.615 billion
Net foreign purchases in 2011: R37.501 billion
Repo rate: 5.5%