Secondary market bond yields fluctuate during the day

• Overnight liquidity turns positive

By Wealth Trust Securities

The yields in the secondary bond market seesawed yesterday with yields increasing during morning hours of trading and retreating once again towards the latter part of the day to close the day mostly unchanged in comparison to its previous days closings. 

Selling interest saw yields on the two 2021s (01.08.21 and 15.12.21), 15.07.23 and 15.06.24 maturities hitting intraday highs of 9.05%, 9.15%, 9.95% and 10.17% respectively against its previous day’s closing levels of 8.95/00, 9.00/10, 9.85/95 and 10.05/10. However, buying interest at these levels, mainly on the two 2024 maturities (15.03.24 and 15.06.24) saw its yields dip to lows of 10.05% and 10.00% respectively once again while two way quotes on the rest of the curve remained broadly steady. 

In the secondary bill market, July and August 2020 maturities changed hands at levels of 8.08% and 8.10% respectively during early hours of trading. 

The total secondary market Treasury bond/bill transacted volumes for 4 September was Rs. 14.06 billion. 

In money markets, overnight net liquidity was seen improving further to a surplus of Rs. 8.60 billion yesterday as the overnight call money and repo rates averaged at 7.54% and 7.64% respectively. The Open Market Operations (OMO) Department of Central Bank injected an amount of Rs. 14.70 billion by way of an overnight reverse repo auction at a weighted average rate of 7.48% while it further injected an amount of Rs. 7.5 billion by way of a 14-day term reverse repo auction at a weighted average rate of 7.30%, valued today. 

Furthermore, it injected in total an amount of Rs. 3.45 billion by way of outright auctions to purchase Treasury bills for durations of 329 to 343 days at weighted averages ranging from 7.93% to 7.97%, valued today.

 Rupee loses marginally

 In Forex markets, the Interbank USD/LKR rate on spot contracts were seen closing the day marginally lower at Rs. 180.75/85 against its previous day’s closing levels of Rs. 180.50/70 on the back of continued buying interest by banks.

The total USD/LKR traded volume for 4 September was $ 65.30 million.

Given are some forward USD/LKR rates that prevailed in the market: one month – 181.20/50; three months – 182.35/55; six months – 183.95/25.