Cadiz Asset Management MD and CIO, Sidney McKinnon, fixed income clarity in an uncertain environment.
The year began with geopolitics dominating headlines as United States President Donald Trump intensified pressure for Greenland to become part of the US, citing national security concerns. He threatened to impose tariffs on eight European countries opposing the move. Following meetings with global leaders in Davos, however, President Trump softened his stance, announcing that he would no longer impose tariffs on Denmark and seven other European nations.
President Donald Trump intensified pressure for Greenland to become part of the United States, citing national security concerns. He threatened to impose tariffs on eight European countries opposing the move. Following meetings with global leaders in Davos, however, President Trump softened his stance, announcing that he would no longer impose tariffs on Denmark and seven other European nations.
The Federal Reserve kept interest rates unchanged at its January Federal Open Market Committee meeting, with only two of the 12 committee members voting in favour of a 25bp cut. The month concluded with President Trump nominating Kevin Warsh, a former Federal Reserve governor, to succeed Jerome Powell as Chair of the Federal Reserve when Powell steps down in May.
In Asia, the Bank of Japan (BoJ) also left interest rates unchanged, as expected, but struck a hawkish tone in its policy statement. The BoJ revised its growth forecasts for fiscal years 2026 and 2027, reinforcing market expectations of a rate hike in April.
Locally, the South African Reserve Bank’s (SARB) Monetary Policy Committee left the repo rate unchanged at 6.75% on 29 January, with a 4–2 vote in favour of holding rates. The main local data release in January was December 2025 Consumer Price Index (CPI), which rose to 3.6% year- on-year, in line with expectations. The increase was driven by higher fuel prices and firmer services inflation, while core inflation edged up to 3.3% from 3.2% in November.
Global sovereign bond markets delivered mixed returns in January. While yields on long-dated government bonds rose in most regions, there were exceptions. German Bund yields, for example, edged down slightly.
The local bond market started the year on a positive note. Both yields on the short-dated R2030 and long-dated R2048 declined by 15bp and 24bp, respectively. The FTSE/JSE All Bond Index (ALBI) delivered a total return of 1.93% in January with the 12+ years and 7-12 years segments contributing most to the positive performance.
In January 2026, the South African money market was marked by the steady policy stance from the SARB.
The 3-month Johannesburg Interbank average Rate (JIBAR) fell by 4 bps to 6.708%, while the 12-month JIBAR declined by 10bps to 7.008%. The Alexander Forbes Short-Term Fixed Interest (STeFI) Composite Index delivered a return of 0.55% for the month.
The rand appreciated in early January, trading as strong as around R15.64–R16.00 per USD at various points, levels not seen since mid-2022 amid broad USD weakness and strong commodity prices, particularly gold and platinum. By late January, the rand was still relatively strong, ending around R/$16.14.
Looking ahead, the national budget remains a key focus for the domestic bond market. The near‑term fiscal outlook appears healthy, supported by a commodity windfall, strong revenue growth, significant progress on funding and lower government bond yields. We expect the upcoming budget to reinforce these positive signals.
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