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2025-12-17 19:00:45
[South African 10-Year Bond Yields Continue to Fall, Approaching Lows Since 2020] ⑴ South African 10-year bond yields further declined to around 8.35%, remaining near levels not seen since 2020. A more moderate inflation outlook has boosted market expectations for further interest rate cuts next year. ⑵ South Africa's overall inflation rate slowed to 3.5% in November from 3.6% in October, below market forecasts of 3.6% and approaching the South African Reserve Bank's newly set 3% inflation target. Furthermore, short-term inflation expectations fell to a record low in the fourth quarter, opening the door to a possible interest rate cut on January 29. ⑶ South African bond prices have risen sharply in recent months, with yields falling sharply in the strongest rebound since the end of the pandemic. The South African Reserve Bank's quarterly report noted that stable domestic consumer prices, lower repurchase rates, a stronger rand, and reduced uncertainty regarding international trade tariffs were key drivers of the yield decline. ⑷ A market-friendly medium-term budget update and the country's removal from the Financial Action Task Force's grey list further boosted positive market sentiment.
