It didn’t take long for fiscal reality to set in, with public sector unions a keen reminder of the hurdles the government needs to overcome if it is to live up to expectations set in the 2021 Budget. Fortunately, nascent local and global growth tailwinds could provide some uplift.
Immediate reaction to the government’s Budget plans to dig South Africa out of its fiscal hole were positive, with bonds, the rand and equities gaining ground in response to the National Treasury’s precarious balancing act. It gave some tax relief while laying out stringent plans to contain expenses.
However, reality has since set in, with the 10-year government bond losing further ground to 8.99%, a 44.5 basis point increase in yields over the past month, and the rand weakening past the R15 to the dollar level.
Contributing to these moves was the rally in the world’s benchmark interest rate, 10-year US Treasury yields, at the start of a new month, with investors finally responding to US Fed chair Jerome Powell’s attempts to calm investors last week. While it is not an easy task to disentangle how much of the shift in investor sentiment towards South African assets this week has been as a result of local versus global fundamental developments, for now, it appears to be a combination of the two.
The South African Pork Producers’ Organisation (SAPPO) coordinates industry interventions and collaboratively manages risks in the value chain to enable the sustainability and profitability of pork producers in South Africa.