South Africa’s 10-Year Bond Yield Reaches Highest Level in Nine Months

South Africa’s 10-year government bond yield has risen to 10.75%, the highest in nine months, driven by fiscal policy issues and global economic uncertainties. The new Government of National Unity faced political challenges by not presenting its first budget and the nation narrowly avoided a recession, with 0.6% growth in the last quarter of 2024. Structural economic challenges persist.

South Africa’s 10-year government bond yield has increased to 10.75%, marking the highest level since early June 2024. This rise is attributed to concerns over fiscal policy and prevailing global economic uncertainties. The situation is further complicated by the new Government of National Unity (GNU), which recently failed to present its first budget, a historic first since the end of Apartheid, due to opposition from the DA and other coalition members over a proposed 2% VAT increase.

The backdrop of South Africa’s budget deliberations has changed considerably since its postponement less than a month ago. This includes the withdrawal of $1.4 billion in funding by US President Donald Trump and the intensifying global trade tensions. As a result, the nation’s financial landscape is increasingly precarious.

Despite narrowly avoiding a technical recession in the last quarter of 2024 with a growth rate of 0.6%, South Africa’s economic expansion is insufficient to effectively address longstanding structural issues. The country continues to face substantial challenges in improving its economic performance.

In conclusion, South Africa’s 10-year bond yield has reached its highest point in nine months amid fiscal policy concerns and global uncertainties. The failure of the new GNU to present a budget represents a significant political challenge, compounded by external funding withdrawals and trade tensions. Although the economy showed minor growth, substantial structural issues remain unaddressed, posing risks for the nation’s financial stability.

Original Source: www.tradingview.com