Every week we give you our summary of happenings in the bond market.
We remain unimpressed with the Q2 GDP spike, which in any case was broadly expected. The underlying long-term weak growth trend remains a very significant risk to fiscal consolidation efforts. As things stand, we already expect a significant budget deficit widening of around R20bn which would take the deficit/GDP ratio from 3.1% to 3.6%. To us, the only significant release this week is US inflation data. As always, we prefer to focus on the bigger picture: “When low SA growth becomes bond bearish”.