African eurobonds rallied on Monday

Underpinning these gains was the combination of bailout euphoria, the improvement in global risk appetite and the sharp pullback in the US dollar — which has prompted a rally in emerging and frontier market currencies. While most African eurobond yields closed the session lower, the most notable moves were in Zambian, Kenyan, South African, Nigerian and Angolan eurobond yields.

While African eurobonds started the week on the front foot, a topside surprise in the US CPI print today would almost certainly halt the rally. However, a downside surprise would add to the tailwinds for emerging and frontier market bonds and would likely provide a boost to African eurobonds as traders readjust their US interest rate expectations.