Every week we give you our summary of happenings in the bond market.
The combination of lower inflation points and rising concern about the ability of the fiscal authorities to stay the course remain the two main drivers of the shape of the SA nominal bond yield curve. The former is likely to keep hopes of more rate cuts alive. This will anchor the short end of the curve. The latter may keep the back end under pressure, and in the process give rise to more bearish yield curve steepening. This week’s release of July PPI and main national budget data is expected to strengthen the case for bearish steepening; which had been our main investment strategy for a while.