South African government bonds strengthened on Wednesday morning, despite a muted reaction by the rand, following the release of consumer inflation data for March.
Inflation, measured by the annual change in the consumer price index, came in at 3.8% in March, below a Trading Economics consensus forecast of 4.1%.
Inflation is the key measure used by the Reserve Bank in determining interest rates, but March is expected to represent the low point of the current inflation cycle.
Retail sales data for the same month are due after 1pm, while both the continuing public-sector wage negotiations — currently deadlocked — as well as possibility of load shedding continue to pose a risk to sentiment, Sasfin Security bond analysts said.
Eskom is currently facing coal constraints, while public servants have demanded wage increases that are well above inflation.
At 10.15am the benchmark R186 government bond was bid at 8.035% from 8.065% and the R207 at 6.885% from 6.915%.
The rand was at R12.0082 to the dollar from R11.9835.
The US 10-year bond was last at 2.8392% from 2.8281%.
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