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Share prices on the road to recovery af... |
Bond market resilient in the face of pressureDESPITE pressure on the rand and further woes in Asian markets, the bond market showed resilience this week with the R150 ending the session at 14.42%, the sentiment no doubt helped by a stronger gold price. Although traders report that the market has been more active this week than last week, bonds are still stuck in a relatively narrow trading range and are sensitive to any negative news. This would suggest that the market is still largely jobber driven although there was some good local institutional buying. Foreign interest was said to be thin. Emerging markets are not flavour of the month at the moment and, although South Africa has weathered the storm pretty well thus far, it is quite likely that the global trading banks are too busy putting out Asian fires to worry about a fresh assault on the local bond market at these levels. Sentiment is still bullish and a tamed inflation rate seems to be the main reason for the interest in the bond market. However, the budget is not too far off and horror stories of provincial overspending may yet upset the government's much trumpeted dedication to financial restraint. Proposed changes to the Reserve Bank's money market operations could also mean that short-term money rates become considerably more volatile in the future. Activity in the bond options market picked up during the week with institutions looking to buy inexpensive calls.
David Bullard Top of page
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