JOHANNESBURG: Yields on South African government bonds jumped on Tuesday as hawkish comments from central bank Governor Gill Marcus combined with a weak auction to drive benchmark prices lower.
The rand also traded weaker, losing just under 1 percent against the dollar as Marcus' comments about diminishing capital inflows to emerging markets added to losses from a general sell-off of risky assets.
It was at 10.7250/dollar at 1537 GMT, down 0.8 percent from its previous close in New York.
Marcus reiterated the bank was in a monetary tightening cycle, with inflation likely to remain outside a 3-6 percent target range for the next four quarters, mainly due to the weak rand and food prices.
The comments hit bonds, with yields climbing 15 basis points on the day, to a session high of 8.365 percent on the benchmark 2026 issue.
"It's a combination of Gill Marcus' speech and a weak auction. Those are the main drivers," said Dale Forssman of World Wide Capital Securities in Johannesburg.
Dealers said bonds on auction today were allocated above their mark-to-market levels, driving the weaker impetus in the debt market.
The only data in the day painted a grim picture for the economy, albeit not quite as grim as economists had been expecting as manufacturing output contracted by 1.5 percent in April, against market expectations of a 5.5 percent drop.
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