Picture: THINKSTOCK
Picture: THINKSTOCK

SOUTH African bonds were weaker on Wednesday morning after data showed that inflation accelerated at a quicker-than-expected pace in February.

Inflation, as measured by the consumer price index (CPI) was at 7% year on year in February from 6.2% year on year in January.

A reading of 6.8% or 6.9% for February had been expected, 7% is the fastest pace of acceleration since June 2009.

In general, when inflation is on the rise, bond prices fall. Rising inflation erodes the purchasing power of what traders will earn on their investments.

At 10.23am, the benchmark R186 bond was bid at 9.325% and offered at 9.315% from a Tuesday close of 9.310%.

The middle-dated R207 was bid at 8.805% and offered at 8.795% from a previous close of 8.800%.

In other bond markets, US government debt slumped for the second consecutive day on Tuesday, as investors’ risk appetite rebounded in the afternoon following an earlier flight to safe-haven assets after the terrorist attacks in Brussels, Dow Jones Newswires reported.

After falling to 1.880% earlier on Tuesday, the yield on the benchmark 10-year treasury note settled at 1.935%, compared with 1.921% on Monday.

The bombings in Brussels initially drove the buying of US bonds, but that support evaporated in the afternoon after European markets closed, the newswire said.