South African bonds were flat in thin noon trade amid what is an abridged trading week because of public holidays but nevertheless a crucial week for local economic data.
A weaker rand was offering no support but the weekly auction this morning was well bid and this has helped to prop up the market a bit.
By 12:00 the short-term government R153 bond was bid at 6.410% from its previous close of 6.385%. The medium-term R157 was at 7.900% from 7.890% at its previous close, while the long-term R186 was bid at 8.425% from 8.385% before.
The rand was last at 8.8452 to the dollar from a previous close of 8.7589.
"Bonds are relatively flat at the moment. This morning’s weekly auction was pretty well supported, but volumes are thin and the market is quiet.
We’re all just waiting for the MPC," a local bond trader said.
Although this week is a short trading one - local markets were closed Monday for Freedom Day and will close again on Friday for Workers’ Day - the three days in between are jam packed with potentially market-moving data.
This week sees the release of consumer and producer inflation data, credit, M3 and trade balance figures and also the interest rate decision following the Reserve Bank MPC’s two-day meeting.
A full house of nine economists see South Africa’s repo rate dropping by 100 basis points to 8.5% come Thursday, according to I-Net Bridge’s latest Econometer. The decision is due shortly after 15:00 on Thursday.
The new consumer inflation index - the measure used by the South African Reserve Bank (SARB) for its inflation target - is expected to have reduced to 8.4% year-on-year (y/y) in March from the surprise 8.6% increase in February, according to a survey of leading economists by I-Net Bridge.
Forecasts among the eight leading economists surveyed for CPI ranged from 7.9% to 9.1%. CPI was at 8.9% a year ago.
The National Treasury on Tuesday received bids totalling 3.365 billion rand and 1.825 billion rand respectively for 800 million rand worth of R204 bonds and 400 million rand of R209 bonds.
RMB analysts see trading ranges for today as 7.96-7.88% on the R157 and 8.46-8.38% for the R186 bond.
Foreigners were net sellers of 186.359 million rand worth of South African bonds, including repo transactions, on Friday after net purchases of 765.272 million rand worth of local bonds on Thursday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was 29.256 billion rand on Friday from 23.816 billion rand on Thursday. Markets were closed on Monday for Freedom Day.
Foreigners were net sellers of 197.903 million rand worth of South African bonds, excluding repo transactions, on Friday after net purchases of 792.147 million rand worth of local bonds on Thursday.
On a year to date basis, foreigners have been net buyers of 7.485 billion rand worth of local bonds, excluding repo transactions.
On a year to date basis for total transactions, including repo transactions, foreigners have been net sellers of 17.475 billion rand.
