Bond yields fluctuate during the day ahead of weekly bill auction

By Wealth Trust Securities

The secondary bond market yields were seen fluctuating yesterday, increasing during morning hours of trading on the back of local selling interest and decreasing once again towards the latter part of the day on foreign buying interest. Activity was witnessed across the curve as yields on the short end to the belly end of the curve, consisting of the maturities of two 2023’s (15.03.23 & 15.07.23), 15.03.24, 01.08.26 and 15.01.27 was seen increasing in morning hours of trading to hit intraday highs of 10.45%, 10.48%, 10.60%, 10.77% and 10.80% respectively. However buying interest from this point onwards saw yields dip once again to intraday lows of 10.40%, 10.45%, 10.45%, 10.72% and 10.76% respectively.    

In addition, the 01.05.20, four 2021’s (i.e. 01.03.21, 01.05.21, 01.08.21 and 15.12.21), two 2022’s (i.e. 15.03.22 and 01.10.22), 15.06.27 and 01.05.29 maturities were seen changing hands at levels of 9.20% to 9.28%, 9.80% to 10.00%, 9.95% to 10.13%, 10.72% to 10.80% and 10.88% to 10.92% respectively as well. 

At today’s Treasury bill auction, the total offered amount of Rs. 21 billion will consist of Rs. 4 billion each on the 91 day and 182 day maturities and further Rs. 13 billion on the 364 day maturity. At last week’s auction, the market favourite 364 day bill recorded a dip of 37 basis points to 9.44% while the 91 day bill decreased by 38 basis points to 8.51% and the 182 day bill by 09 basis points to 9.00%. The 08.05.2020 or the latest 364 day bill was seen changing hands at levels of 9.25% in the secondary market. 

The total secondary market Treasury bond/bill transacted volumes for 13 May was Rs. 12.30 billion. In money markets, the overnight call money and repo rates averaged 8.39% and 8.49% respectively as the net surplus liquidity in the system stood at Rs. 22.34 billion yesterday. The Open Market Operations (OMO) Department of Central Bank drained out liquidity by way of two days, three days and eight days repo auctions at weighted averages ranging from 8.50% to 8.59%. 

 Rupee loses further

The USD/LKR rate on spot contracts depreciated further yesterday to close the day at levels of Rs. 176.80/90 against its previous day’s closing levels of Rs. 176.50/65 on the back of continued buying interest by banks.

The total USD/LKR traded volume for 13 May was $ 83.60 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 177.70/90; 3 months - 179.50/70 and 6 months - 182.20/40.