South African bonds finally responded to a firmer rand on Tuesday afternoon‚ with the local currency earlier hitting a more than two-and-a-half year high to the greenback.
The rand rose to R12.1929 in intra-day trade‚ after reports that global consulting firm McKinsey and the Gupta-linked Trillian Capital Partners could have their assets frozen pending criminal charges.
Analysts had expected bonds to strike a slightly firmer tone due to overnight gains by the rand‚ on news that arrests of senior corrupt officials and members of the controversial Gupta family could be imminent.
German and UK inflation data releases earlier came in largely as expected‚ which helped support bonds and risk-on sentiment‚ analysts said.
The lack of clear signs of accelerating inflation and the recent strength of the euro could temper the European Central Bank’s plans to taper monetary policy.
Locally‚ focus remains on political developments and the Reserve Bank‚ which will announce its latest monetary policy stance on Thursday.
Nedbank Corporate and Investment Banking analysts said while the Bank was likely to keep the repo rate unchanged at 6.75% there were “downside risks to the Bank’s inflation outlook‚ while its growth forecasts are expected to remain unchanged.”
At 3pm‚ the R186 was bid at 8.475% from 8.495% and the R207 at 7.155% from 7.175%. The rand was at R12.2582 to the dollar from R12.3089.
The US 10-year treasury bond was at 2.5365% from 2.5475%.