South African bonds were up to 7 basis points firmer in midday trade on Wednesday, on the back of minutes released from the Federal Reserve's latest meeting which added to expectations that it would soon implement another round of quantitative easing.
A local trader said that the bonds were also stronger on the back of local currency, which was firmer.
By 11:43 the benchmark R157 bond was at 7.160% from its close of 7.240% on Tuesday, while the R207 was bid at 7.885% and offered at 7.855% from 7.930% at its previous close. The R186 was bid at 7.990% and offered at 7.990% after closing at 8.025%.
The rand was bid at 6.8293 to the dollar from its previous close of 6.8431.
"We're firmer on the back of the Fed's comments. Players see this as an opportunity for local stock to be picked up and for demand to increase. We're also stronger on the currency," a local trader said.
Earlier in the day, another trader said that bonds are on the front foot after news that the US might step up its easing measures.
"For emerging markets this is obviously good news and that will mean more demand for SA bonds from foreigners," he said.
South African retail trade sales at constant (2008) prices for August increased 4.6% year-on-year (y/y) after a revised 8.0% (7.9%) growth in July, figures released on Wednesday by Statistics South Africa showed.
A survey of leading economists by I-Net Bridge had expected retail trade sales to increase 8.4% y/y.
Also on Wednesday, the National Treasury said it will auction one billion rand worth of R203 bonds and R1.1bn worth of R208 bonds on October 19, at its regular weekly auction.
Foreigners were net sellers of R1.469bn of South African bonds including repo transactions on Tuesday, after net sales of R354.874m of local bonds on Monday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R176.425bn on Tuesday from R41.095bn on Monday.
Foreigners were net buyers of R410.226m of South African bonds excluding repo transactions on Tuesday, after net sales of R49.959m of local bonds on Monday.
In the year to date foreigners have been net buyers of 69.067 billion rand worth of local bonds, excluding repo transactions.
So far for total transactions, including repo transactions, foreigners have been net buyers of 60.428 billion rand worth of bonds.
In 2009 foreigners were net buyers of 27.755 billion rand worth of local bonds, excluding repo transactions, while for total transactions, including repo transactions, foreigners were net sellers of 3.3 billion rand worth of bonds.
