South Africa's short-term negotiable certificate of deposit (NCD) is pricing in the possibility of one more interest rate cut of 50 basis points in September.

However, the long end is now weakening as it expects a rate hike to follow a sideways stance after the next and last cut in the cycle.

The short end of the market remains at 7.050 percent from late August levels, but is expected to move below seven percent when looking at current pricing, according to a dealer. She sees this NCD finding a base at 6.900 percent.

The long end has weakened by 12.5 basis points since 19 August to a current 7.925 percent.

"The market is tricky at the moment and is contradicting itself. The short end is expecting another cut, but it then goes weaker at the long end.

Everyone is looking for longer cash, and it depends on if the swap agreements allow this," said the money market dealer.

"I think there might be a cut in September, rather than November as some reports hold - why wait?

"There will then be a pause and the market will move sideways until the second quarter of next year, and then they might raise again," said the dealer.

The South African Reserve Bank's (SARB's) Monetary Policy Committee (MPC) on 13 August decided to cut the repo rate by 50 basis points to 7.0 percent.

This was out of line with consensus expectations in the marketplace of an unchanged rates stance.

SARB Governor Tito Mboweni said that notwithstanding upside cost pressures, adverse economic conditions had tilted the risk to inflation to the downside.

Mboweni said that the Committee as usual deliberated at some length and it was "very closely debated", but at the end of the process the cut was agreed on as communicated.

The next rates decision is made on 22 September.

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