* Bonds weaken ahead of weekly auction
* Rand relinquishes gains over euro uncertainties
JOHANNESBURG, June 18 (Reuters) – South African government
bond yields rose on Monday ahead of a weekly auction on concerns
about the additional supply, while the rand reversed earlier
gains as global risk appetite stayed weak due to doubts over the
outlook for the euro zone.
The yield on the three-year benchmark closed a
basis point higher at 6.11 percent and that for the 14-year
issue added two basis points to 8.145 percent.
“The market is getting nervous about the supply tomorrow
and more importantly CPI on Wednesday,” said Di Luo, an interest
rate strategist at HSBC in London.
The national Treasury is expected to inject 2.1 billion rand
in total worth of its 2017 and 2021 paper on
Tuesday, as well as a new 11-year bond due in 2023.
Besides the weekly auction, consumer inflation data due out
on Wednesday will offer the market clues on the domestic
interest rate outlook for the rest of the year.
Some market players are pricing in a possible cut before
year-end as economic growth remains anaemic while price
pressures are relatively benign.
“South African (debt market) rates have rallied hard ahead
of the Greece election weekend, so even though the result was
modestly positive the market wasn’t pricing in any negativity to
begin with, so there has been a retracement,” Luo added.
Continued…
