South African bonds were slightly firmer on Friday morning, tracking the rand, ahead of the release of US inflation data later in the day.Market sentiment is cautious ahead of the US release as it will give more clarity about Federal Reserve policy makers’ path regarding interest-rate increases, as inflation, which remains below 2%, remains a headache for them.
Nedbank analysts expect US consumer inflation to rise on the back of services, fuel and energy costs.Rand Merchant Bank analysts say expectations are for headline inflation to increase to 2.3% and core inflation to 1.8%, with there being higher-than-usual uncertainty because of the potential effects of recent hurricanes, and because of the repeated forecast misses in the past few months.
Following the release of the Federal open market committee’s September minutes earlier in the week, markets were left unclear about the Fed’s interest-rate decisions, but most policy makers felt that another rate increase was on the cards this year.
At 10.46am, the R186 benchmark government bond was bid at 8.645% from 8.680%
The rand was at R13.3854 from R13.4498. – BusinessLive