South Africa 10-Year Bond Yield Hovers Near 2018-Lows

South Africa’s 10-year government bond yield traded just below 8%, holding close to the lowest since March 2018, as ongoing optimism over the country’s economic fundamentals continues to attract foreign investors. Positive factors supporting the outlook remain in place, including structural reforms, fiscal discipline, a credible central bank, stable government, a favorable currency, and high real interest rates. Strong metals prices and low oil costs further underpin the economy, driving favorable terms of trade that enhance the government’s fiscal position and ease inflationary pressures. While GDP growth remains modest, it is moving steadily in a positive direction, with the central bank projecting growth of 1.4% this year and approaching 2% over the medium term.

South Africa’s 10-year government bond yield continued to fall to just below 8%, reaching the lowest since March 2018, as investors maintain strong interest in the country's assets. On the monetary policy front, the South African Reserve Bank kept its repo rate steady at 6.75% during its first meeting of 2026, weighing benign inflation against global geopolitical uncertainty. Still, most economists anticipate further easing this year, potentially beginning in March, with forecasts pointing to at least 50 basis points of cuts in 2026. The strong performance of South African assets last year has carried into this year, helped by a series of positive developments, including stronger fiscal position and modest growth prospects compared to recent years. Business confidence has also been supported by improved electricity supply, more efficient logistics, and the resilience of the GNU. The country also benefits from its relative insulation from geopolitical tensions.

South Africa’s 10-year government bond yield eased further to near 8%, approaching the lowest since July 2019, reflecting improved sentiment toward the country’s assets amid recent positive developments. These include a stronger fiscal position, political stability and modest growth prospects compared to recent years. The head of the National Treasury said South Africa’s budget will show government debt stabilizing relative to GDP for the first time in nearly 20 years, alongside a third consecutive primary surplus that supports fiscal credibility. Moreover, South Africa now has a formal inflation target centered around 3%, with inflation currently sitting at relatively low levels. Attention now turns to the South African Reserve Bank’s policy decision on January 29, with analysts divided on the outcome. While there is scope for easing given a favorable inflation outlook and a stronger currency, the consensus favors holding rates steady at 6.75%.