South African government bonds were in a much better spot on Friday morning, taking their cue from the overseas markets.
“A poor inflation print from the US was all that was needed to put the brakes on the dollar rally,” Rand Merchant Bank analyst Gordon Kerr said in a note.
The yield on the benchmark US 10-year paper was 2.95% in early trade, after touching the symbolic 3% mark earlier in the week.
The local market also drew support from the Bank of England (BoE), which kept interest rates on hold on Thursday, even though it stressed that it was likely to increase interest rates once the economy picked up.
The recent UK economic data have suggested a slowdown in the economic activity in the country, raising concerns that the BoE will follow through on monetary policy normalisation.
The market concerns have been played out in the marked weakness in the pound, which is yet to recover from the Brexit setback.
At 10.16am, the benchmark R186 government bond was bid at 8.34% from 8.38% and the R207 at 7.20% from 7.23%. The rand was at R12.3194 to the dollar from R12.3017.