* Bank hints rate cuts off the table
* Bank statement more hawkish than market expected
* Rand holds to gains, current levels seen sustained
JOHANNESBURG, Jan 19 (Reuters) – South African
government bond yields rose after the Reserve Bank kept its key
repo rate on hold on Thursday, saying the inflation outlook had
deteriorated and signalling a more hawkish tone than the market
had expected.
The rand largely held on to the day’s gains against the
dollar after Governor Gill Marcus announced the key repo rate
would stay unchanged at 5.5 percent, as expected.
The yield on the 2015 bond rose to 6.67 percent
from 6.63 percent just before Marcus’s announcement, although it
was down one basis point on the day.
The yield for the longer-dated 2026 issue was
slightly higher at 8.4 percent at the close, from 8.38 percent
just before the rates announcement at 1318 GMT.
“We saw the curve sell off a little bit after the speech.
There was no movement (in rates) as expected but the tone of the
meeting was a little bit more hawkish than the market perhaps
had priced in,” Absa Capital bond trader Daniel Sabiston said.
“The 157’s have sold off a bit … so that’s put a little
bit of pressure on the short end of the curve, but we’ve
continued to see buying on the long end so that’s basically
flattened out the bond curve.”
Continued…
