South African 25-year government bond yields fell to the lowest in 10 months before tomorrow’s auction of the debt as signs of slowing global growth boost demand for fixed-income securities.
The Pretoria-based Reserve Bank is selling 1.1 billion rand ($154.7 million) of the 6.25 percent securities due 2036 and 1 billion rand of 6.5 percent notes due 2041. The secondary-market yield on the 2036 bonds dropped 13 basis points, or 0.13 percentage point, to 8.119 percent today, the lowest on a closing basis since Nov. 22 2010.
South Africa’s economy, Africa’s biggest, expanded an annualized 1.3 percent in the second quarter, its slowest pace in almost two years, as manufacturing and mining output plunged. A report on Sept. 2 showed U.S. employers added no jobs in August, adding to signs growth in the world’s largest economy is moderating.
Lower bond yields are “being driven by bearish growth sentiment,” Tradition Analytics strategists led by Johannesburg-based Quinten Bertenshaw wrote in a research note. “It is unlikely that longer-dated bonds will come under sustained pressure from here.”
Global stocks extended losses today and bonds rallied on concern Europe’s debt crisis may worsen, slowing growth in the euro region, after an election loss for Germany’s ruling party stoked speculation support for bailouts of Europe’s indebted states is fading.
Tomorrow’s auction starts at 11 a.m., and the results will be announced at about 11:30 a.m., the Reserve Bank said on Bloomberg.
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