US Bond Yield
US Bond Yield
Inflation measures have been edging higher in the United States in recent months, in contrast to much of the developed world, where price pressures have remained quiescent.
Yields on the 10-year US Treasury Bond moved above 3% at midweek, the first time that threshold had been breached in four years. Inflation measures have been edging higher in the United States in recent months, in contrast to much of the developed world, where price pressures have remained quiescent. The solid US economic growth relative to the rest of the developed world, combined with rising interest rates, gave the dollar a powerful boost in the past week.
Higher yield in the US encouraged investors to disinvest out of emerging markets and invest in the lower-risk US bond market, which put pressure on emerging market currencies and capital markets. South Africa was no exception, and the rand lost 1.87% against the US dollar, trading as low as R12.49 at some point. SA equity markets came under some pressure but recovered towards the end of the week. The JSE all-share index closed 0.22% in the red. The biggest loser was the rand-sensitive financial sector with a loss of 1.96%. The industrial and mining sectors gained some ground on a softer rand and traded higher at 0.12% and 1.03% respectively.
Most developed markets reacted positively to the stronger dollar and closed higher for the week. Positive geopolitical news out of the Korean Peninsula also supported markets. North Korean leader Kim Jong-un met his South Korean counterpart Moon Jae-in on the south side of the demilitarised zone that separates their countries, the first time the North Korean leader had crossed the border.
On local soil, the producer price inflation (PPI) rate for March is 3.7% year-on-year, a 0.2% decrease from February’s PPI figure of 4.2%.
The retail price of petrol in South Africa will rise by 3.4 percent from May 2, while the price of wholesale diesel will rise by 4.6 percent. This means the price of petrol will rise by 49 cents to R14.97 per litre in the commercial hub of Gauteng, while diesel will go up by as much as 59 cents to R13.34 a litre. The Central Energy Fund said in a statement that the depreciation of the rand against the US dollar in the past month, as well as a higher oil price globally had contributed to the rise in local fuel prices.
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