* Govt bonds weaken, CPI adds to negative mood
* Rand at 2-wk lows, to remain under pressure
JOHANNESBURG Dec 14 (Reuters) – South Africa’s
government bonds fell on Wednesday after data showed inflation
hit 20-month highs in November, diminishing lingering hopes of
an interest rate cut next year.
The data added to negative sentiment that was already
driving markets weaker and saw the rand hit two-week lows.
Yields climbed to multi-week highs as inflation pierced the
3-6 percent target band for the first since Jan.
2010.
The yield on the 2015 government bond went up 12.5
basis points to 7.025 percent and that on the 2026 note
rose 14.5 basis points at 8.78 percent.
“The bond weakness is mainly on the back of the rand and
there’s also not that much liquidity in the market so moves tend
to be exaggerated,” said a bond dealer at Stanlib.
The rand fell as much as 0.5 percent to a fresh two
week low at 8.4075. It was trading at 8.40 percent at 1527 GMT,
from Tuesday’s New York close of 8.36.
Should the rand weaken even further, it will add upward
pressure to inflation over the next few months and bonds could
remain on the backfoot for a while.
Continued…
