South African bond yields have fallen sharply in recent months in one of the strongest rallies seen since the end of the Covid-19 pandemic. The 10-year South African government bond yield has fallen by 234 basis points from almost 11% in April to around 8.65% at the end of November — levels not seen since early 2021. According to the Reserve Bank’s quarterly bulletin, the decrease was driven by stable local consumer price inflation, reductions in the repo rate, a stronger rand and reduced uncertainty around international trade tariffs.
The Bank said the rally was further supported by policy rate cuts by the US Federal Reserve (Fed) and improved investor confidence after South Africa’s removal from the Financial Action Task Force (FATF) greylist, the 2025 medium-term budget policy statement (MTBPS) and the formal adoption of a new 3% inflation target. The Reserve Bank’s monetary policy committee (MPC) reduced the repo rate by 25 basis points to 6.75% at its November meeting — the fourth cut this year — bringing the total reduction in 2025 to one percentage point. The MPC said the risks to the growth and inflation outlook were now “balanced” and reaffirmed its commitment to the 3% inflation target announced in the MTBPS.
Inflation is expected to remain within a 2–4% tolerance band, with policy directed toward maintaining the 3% anchor. The rally reduces the government’s borrowing costs and could ease fiscal pressure, but it also reflects global investors’ renewed search for yield amid easing US policy. The rally in bond yields was mirrored by a surge in trading activity and foreign demand for South African debt.
Read Full Article on Business Day
[paywall]
According to the Reserve Bank, foreign investors were net buyers of R71.8bn in the third quarter — the biggest quarterly inflow on record, boosted by the biggest-ever monthly net purchase in September. Cumulative net inflows reached R71.4bn in the first 11 months of 2025, compared with just R12.2bn a year earlier. “This mainly reflects the US Fed’s decision to cut policy rates further, the shift to a preferred lower domestic inflation target of 3% announced in the 2025 MTBPS and positive investor sentiment following South Africa’s exit from the FATF greylist,” the Bank said.
Turnover in the secondary bond market of the JSE and Cape Town Stock Exchange rose 14.1% year on year to R47.2-trillion in the 11 months to November, supported by higher bond prices. Foreign participation also edged higher, averaging 10%, up from 9.1% in 2024.
[/paywall]
