Secondary market bond yields increase on moderate volumes

By Wealth Trust Securities

The secondary bond market yields were seen increasing yesterday following the US Federal Reserve’s policy decision to increase rates by 25 basis points coupled with profit-taking on the back of moderate volumes. 

The yields on the liquid 01.05.20, two 2021’s (i.e. 01.03.21 and 01.05.21) and 01.08.26 maturities were seen increasing to intraday highs of 9.57%, 9.73%, 9.77% and 10.22% respectively against its previous day’s closing levels of 9.40/50, 9.63/68, 9.68/75 and 10.12/20 respectively while two-way quotes on the rest of the yield curve were seen increasing and widening.

The total secondary market Treasury bond/bill transacted volumes for 13 December 2017 was Rs.7.75 billion.

In money markets, the Central Banks Open Market Operations (OMO) Department was seen mopping up excess liquidity by way of a term repo auction. The auction drained out an amount of Rs. 9.23 billion at weighted averages of 7.33% for seven days. 

Further, an amount of Rs. 13.27 billion was mopped up on overnight basis at a weighted average of 7.25% as the net surplus liquidity increased to Rs. 30.04 billion yesterday. The overnight call money and repo rates averaged 8.10% and 7.53% respectively.

Rupee closes stronger

In the Forex market, the USD/LKR rates on spot contracts were seen closing the day stronger at Rs. 153.10/20 subsequent to hitting an intraday low of Rs. 153.50 against its previous day’s closing levels of Rs. 153.20/35.

The total USD/LKR traded volume for 13 December was $ 86.45 million.

Some of the forward USD/LKR rates that prevailed in the market were one month - 154.15/30; three months - 155.85/00 and six months - 158.65/80.