Local government bonds were treading water at midday on Friday‚ after a less hawkish message from US Federal Reserve chair Jerome Powell in his US Senate testimony on Thursday.

The market was following a steady rand‚ which held back from further weakness against the greenback‚ after reaching R11.90/$ earlier.

The dollar weakened on concern that a trade war may be the result of US President Donald Trump’s decision to introduce tariffs on steel imports‚ as well as more sober comments from the Fed on the extent of interest-rate hikes in the US in 2018‚ analysts at Nedbank Corporate and Investment Banking said.

At 11:30am the R186 was bid at 8.135% from 8.125% and the R207 was at 6.73% from 6.72%.

The rand was R11.854 to the dollar from R11.8508.

Powell poured cold water on market expectations of sharply rising inflation in the US‚ saying “wage inflation was not at a point of acceleration“.

That outlook was milder than his comments on Tuesday‚ according to some analysts‚ when he emphasised the outlook for faster inflation‚ Dow Jones Newswires reported.

Investors viewed that emphasis as an indication that the Fed could accelerate its pace of interest-rate increases to four from the three policy makers penciled in at their December meeting‚ the newswires said.

The US 10-year treasury was last at 2.8106% from 2.8615%.

by Maarten Mittner – BusinessLIVE