South Africa: Fixed Income under pressure
South African bond markets have come under pressure, driven by currency weakness and rising fuel costs. These factors are likely to push inflation higher in the months ahead and keep interest rates elevated. Inflation has risen to 4.0%, and the SARB increased the repo rate to 7.0% during the period. Cash investments have remained stable, however, and continue to benefit from higher short-term rates.
What this means for portfolios: Portfolios should prioritise careful duration management, maintain exposure to income-generating assets and ensure adequate diversification.
