Bonds weaken
After disappointing consumer inflation data for July, South African bonds weakened by almost as much as 10 basis points last month.
The key government R153 bond was at 9.190% from its previous close of 9.120%, while the short-term R196 was bid at 9.450% from its previous close of 9.375%. The longer-term R157 bond was at 8.470% from its previous 8.415%. The rand was bid at 7.2596 from its overnight close of 7.2946.
A local bond trader stated that the CPI data was pretty bad which caused bonds to weaken by several points. He also said that there is a limited supply in the market at the moment so they should come back a bit.
Statistics South Africa said that South Africa’s consumer price index excluding mortgage rage changes for metro and other areas was up 6.5% y/y in July from 6.4% y/y in June. The South African Reserve Bank for its inflation target uses this index.
The 12-month rate of change in the consumer price index (CPI) for metropolitan areas was up 7.0% y/y in July from a 7.0% y/y increase in June. Forecasts expected the CPI to have decreased marginally to 6.9% y/y with forecasts ranging from 6.6% to 7.2%.
The core inflation rate, excluding volatile foods, municipal rates and monetary policy changes, was up 5.6% y/y in July from 5.7% y/y in June.
Bond Exchange of South Africa statistics show that foreigners were net sellers of R1.986bn worth of South African bonds.
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