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Some fly and some fall in stock market's... The casualties of October '9... Impasse in battle for labour market refo... Moulding the future of SA busines... Some fly and some fall in stock market's... Kaizer Chiefs may bring soccer to the tr... |
Bonds dumpedDavid BullardWHEN the rate on the R150 (government bond) briefly touched 13,61% on October 22nd most commentators believed the bond market was in a strong bull phase and that the next stop would be 13,25%. After all, Reserve Bank governor Chris Stals had at last dropped the Bank rate, inflation was set to fall, the rand was holding steady and credit demand was thought to be declining. More importantly though, we appeared to have shrugged off the woes of the Asian emerging markets and several leading economists proudly pronounced that we were being judged on our own merits. Apparently foeign buyers couldn't get enough of our bonds. Last week the story was very different and the bulish sentiment of the previous week vanished.Far from being buyers, foreigners became determined sellers, dumping about R4-billion of SA bonds into a reluctant market and wiping out most of the year's gains in the bond market. The panic spread to local players, many holding large long positions in expectation of a further drop in bond yields. The resulting pandemonium caused rates to seesaw violently as traders tried to cut long positions to contain losses.
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