Interest Rates & US Bond Yields

Wealth

Interest Rates & US Bond Yields

The rand traded 4.14% weaker against the USD as the narrative of rising US government bond yields and a strong dollar played out again, bringing pressure to bear on other currencies.  

The rand traded 4.14% weaker against the USD as the narrative of rising US government bond yields and a strong dollar played out again, bringing pressure to bear on other currencies. Yields on US 10-year notes moved up to trade as high as 3.12%, as firmer oil and solid US economic growth prompted renewed inflation concerns.

A combination of solid US economic data and concerns over the potential for new US financial sanctions on Iran helped push oil prices to their highest levels since 2014 the past week, pushing global Brent crude above the $80 mark.

South Africa’s unemployment rate remained unchanged at 26.7% over the first quarter of 2018, compared to the fourth quarter of 2017, according to the quarterly labour force survey released by Statistics South Africa.

The economic events of the past week did not play out positively in the local markets and the JSE all-share index (ALSI) traded 1.05% lower. The financial sector was the hardest hit, closing 5.55% lower in response to new inflation fears impacting the economy. On the other side of the equation, factors that negatively influenced the financial sector were hugely positive for the resources sector, which closed 4.77% higher. The industrial sector closed 1.60% in the red.

In the US, the S&P index closed lower. Markets in other developed countries closed the week in the green, while global stability and positive investor sentiment out of Europe drove markets higher.

The monetary policy committee of the South African Reserve Bank (SARB) will be meeting this coming Thursday to make a decision on interest rates, and it is expected that rates will remain unchanged. Higher oil prices, the weaker rand and higher VAT rate could have a negative effect on inflation, and the SARB will take note of all these factors when making its decision.

Standard & Poor’s is expected to release its credit rating review for South Africa on Friday. Although the outcome is not as crucial as it was a year ago, it will still have significant implications for the country.

Regards,

SECURITAS – Wealth Management















Market data provided by I-Net | News article provided by Securitas with 4D Wealth

Securitas Financial Group is a Registered Financial Services Provider (FSP) FSB license number 6536

Johan Steyn, RFP®, Cell. 082 680 9510, johan@securitas.co.za;  

Albert van der Linde, B.Com (US), B.Com (Hons)(UP), Cell. 076 087 3084, albert@securitas.co.za;

Hannes Bresler, CFP®, B.Com (Hons)(UJ), Pr.Tech Eng, Cell. 082 823 7973, hannes@securitas.co.za;