The yield on 10-year rand-denominated government bonds touched 7.92% on February 25 — the lowest reading since 7.87% was recorded on May 21, 2015 — before surging 102 basis points to 8.94% by March 13 as the Middle East conflict erupted and the rand depreciated sharply.
The rally through 2025 and into early 2026 was underpinned by a confluence of tailwinds: a stronger rand, decelerating consumer price inflation, the SARB's announcement of a revised 3% inflation target, successive policy rate cuts, and sustained net bond purchases by non-resident investors.
The yield curve flattened over the period, with long-end yields declining more steeply than short-term rates — a configuration that typically signals improved inflation expectations and a market repricing of the future monetary policy path. The SARB's target revision was cited as a particularly significant driver of that shift.
The reversal in mid-March was broad-based. Yields rose across all maturities except the very short end, as geopolitical risk premium was repriced into South African assets alongside pressure on the exchange rate. The speed and scale of the move — over 100 basis points in roughly two and a half weeks — underscored how quickly the favorable conditions that drove the rally can unwind.
