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South Africa Bond Yields Climb to 2-Week High as Rand Fluctuates

South African bond yields rose to the highest level in more than two weeks as investors weighed prospects for the withdrawal of U.S. stimulus that has boosted demand for emerging-market assets. The rand fluctuated between gains and losses.

Fed Chairman Ben S. Bernanke told Congress last week that any reduction in stimulus would depend on the economy’s performance. Data today may show U.S. durable goods orders climbed and claims for jobless benefits fell, while a report yesterday showed new home sales rose to a five-year high. Foreign investors sold a net 1.1 billion rand ($113 million) of South Africa bonds yesterday after 2.44 billion rand of inflows in the previous two days, according to JSE Ltd. data.

“Global data hasn’t been helpful,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e-mailed comments. “Markets are still sensitive to tapering fears.”

Yields on benchmark 10.5 percent bonds due December 2026 climbed 10 basis points, or 0.1 percentage point, to 8.10 percent as of 10:46 am in Johannesburg, the highest level on a closing basis since July 8. South Africa’s currency was little changed at 9.7852 per dollar after weakening as much as 0.3 percent and strengthening as much as 0.5 percent. The rand fell 1.1 percent yesterday, snapping a three-day streak of gains.

While Bernanke has not set a calendar for reducing stimulus, 50 percent of economists surveyed by Bloomberg News between July 18 and 22 said the Fed will start trimming its $85 billion in monthly bond buying in September.

South Africa’s producer price index rose 5.2 percent in June, from 4.9 percent the previous month, a report may show today, according to the median estimate of 12 economists in a Bloomberg survey. Consumer inflation slowed to 5.5 percent in June, from 5.6 percent, data showed yesterday.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

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