* Rand retraces to end weaker against dollar, tracks euro
* Shorter-dated bonds remain supported, R157 hits fresh
JOHANNESBURG, June 11 (Reuters) – South Africa’s rand and
long-dated bonds ended weaker on Monday, undoing earlier gains
as initial cheer over expected inflows from inclusion in a
prominent bond index and a bailout for Spain’s banks faded by
the afternoon session.
Bonds have rallied as much as 8.5 basis points in the
morning after a Citibank confirmation that 11 South African
bonds had passed a three-month test to become part of the bank’s
prominent World Government Bond Index (WGBI) from October 1.
The rand retraced gains to a 8.4477 low by the end
of local trade, compared to a 8.3846 close in New York on Friday
and nearly 20 cents off its best level of 8.2501 hit in the
morning session after the bond index announcement.
The local unit is trading just below first support at 8.45,
which if breached opens up the 8.50 level where it bounced from
on Friday and in May before that. Technical analysts say a test
of Friday’s 8.5040 could happen before the local market reopens
The R186/R157 yield spread extended to a record 207 basis
points in the session as the longer-term paper
reversed all the day’s gains to end with a higher yield of 8.31
percent while the 2015 note retained some gains to
6.24 percent, off a life-time record 6.18 percent hit after the
“Bonds remain resilient with the benchmark R157 continually
reaching fresh all time lows. Following the WGBI news where
estimations of inflows for local assets range from $5-9 billion,
foreign demand is likely to remain strong,” said Anisha Arora,
emerging market analyst at 4Cast.
Data from the exchange operator JSE Ltd showed
offshore accounts had bought 6.9 billion rand worth of debt last
week and have picked up more stock so far this year than they
had this time in 2011.