Rein in government spending and ship can be turned around – Rhandzo Mukansi

In the $100trn global bond market, it appears to be hard to find a good investment. With Germany announcing that it will sell an ultra-long bond at 0% for the first time this week, there is talk of Germany being in danger of Japanification. If investors put their money into Japanese, German and many other European government bonds, they would be putting money into assets knowing they will lose money on the deal. Contrast that to the yield of South Africa's 10-year bond which is more than 8%. It sounds like a no brainer for a global bond investor, but foreigners are still not biting. Last week they were dumping foreign bonds at a rate of almost R2bn a day on the prospect that Moody's might downgrade South Africa to junk status. In an interview with Biznews' Alec Hogg, Rhandzo Mukansi from Futuregrowth takes a peek at what has been going on in the global bond market and says South Africa's fiscal situation is deterring investors despite the good yields. Mukansi dismisses a possible IMF bailout and says if government spending can be reined in, the ship can be turned around. – Linda van Tilburg

Rhandzo Mukansi said what was happening in global bonds was that the world had essentially been betting on deflation and there was a risk that over time the rates would be even lower than they are today. It would result in negative interest rates across large swathes of Europe and in the US. Deflation meant that prices fell and that was not really good for economies.

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