The local credit market has been booming this year and, following a quiet 2018, demand for inflation-linked bonds is also on the rise. The increased demand for these bonds also contributed to an increase in the breakeven inflation rate.
Central banks’ dovish stance boosts asset prices, while local bonds should benefit from low global yields
Central banks globally have turned dovish. This supports financial conditions, which, in turn, boosts asset prices. With global bond yields falling, investors will start looking for higher-yielding assets.
The South African budget speech delivered on 20 February was the toughest in years. However, despite the deterioration in fiscal metrics, markets rallied shortly after the budget speech. Eskom’s bailout from government will be phased in over a number of years, thereby improving the entity’s financial position.
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