South Africa: 10-Year Bond Yield at Over 1-Week Low

South Africa’s 10-year bond yield eased to below 8.70%, reaching the lowest since mid-May, on easing inflation concerns amid hopes of a Middle East conflict resolution. Meanwhile, domestic investors prepared to the upcoming SARB's meeting scheduled for May 28, which could bring the first hike since May 2023. Headline inflation raced to 4% in April from 3.1% in March, amid rising price pressures from the Middle East, and it is expected to climb further in the near-term. inflation now sits at the edge of the 2.0% to 4.0% “tolerance band” around the actual 3% target that is in place. The South African Reserve Bank is increasingly seen lifting rates by 25 bps to prevent second-round effects from fuels cost pressures. Still, a hold remains possible to better assess the evolution of inflation and developments in the US-Iran conflict.