Johannesburg - The medium-term trend indicated that the yield on the R150 bond might fall below 14 percent in the next two weeks, said Victor Hugo, a market strategist for Analysis on Diagonal Street.
There would be some resistance at 13,65 percent but medium-term counts pointed to levels below 12,28 percent, last seen in April 1998. "However, the recent consolidation since early March does enable potential for an upward move in yields during the next few months, with substantial support at 15,3 percent."
Upward pressure on yields could be associated with concerns about election uncertainties and possible changes following Tito Mboweni's appointment as governor of the Reserve Bank, said Hugo.
But the important factor was that the 20-week trend pointed to a lower yield for the R150. The yield on the bond closed Friday's trade at 14,23 percent from 14,25 percent on Thursday.
The recently firmer rand added confidence as far as the direction of the yield on the R150 was concerned. Should the rand trade persistently below R6,01 against the dollar, this would add to bonds' bullish trend. Market watchers were keeping a careful eye on the US 30-year long bond, saying a key support level was around 5,65 percent. They said action above that level could trigger a push above the 6 percent area, which would also put pressure on local bonds.
On Friday in late local trade the currency was at R6,0985 against the dollar from R6,1385. But in New York trade the rand recovered to the R6,06 region. Dealers said Fridays' rand close usually had a major input in the assessment of trends for a few weeks ahead.