A shift in momentum witnessed in secondary bond markets during the week

Monday, 17 November 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities A shift in momentum was witnessed in secondary bond markets during the week ending 14 November as the overall yield curve witnessed a parallel shift upwards for the first time in four weeks. During the week, the weighted averages of the 182 and 364 day bills remained steady at 5.84% and 6.00% respectively against market expectation with the 364 day bill holding steady for a fifth consecutive week.

The actively quoted maturities of 1 July 2019, 1 July 2022 and 1 January 2024 increased from weekly lows 6.98%, 7.50% and 7.73% respectively at the beginning of the week to highs of 7.15%, 7.80% and 8.00% towards the later part of the week. In addition activity was witnessed on the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) and the 1 May 2021 maturity as well, within the range of 6.80% to 7.00%, 6.88% to 7.05% and 7.30% to 7.40% respectively. Furthermore activity on secondary market bills saw December 2014, January 2015, February 2015, the 182 day bill and the 364 day bill changing hands within the range of 5.45% to 5.55%, 5.50% to 5.60%, 5.55% to 5.65%, 5.70% to 5.80% and 5.93% to 6.00% respectively.

In money markets, overnight call money and repo rates averaged at 6.00% and 5.43% during the week as surplus liquidity in the market decreased to average Rs. 12.58 billion against its previous week’s average of Rs.26.37. The Open Market Operations (OMO) Department of the Central Bank was seen mopping up liquidity during the week by way of three days to seventy seven days term repo auctions at weighted averages ranging from 5.78% to 6.03%. Rupee trades within a narrow band during the week The rupee on spot next and spot next-next contracts was seen trading within a range of Rs. 130.95 to Rs. 131.01 and Rs. 131.05 to Rs. 131.12 respectively during the week amidst continued importer demand and foreign selling on rupee bonds. The daily average USD/LKR traded volume for the first four days of the week was $ 59.94 million. Given below are some forward dollar rates that prevailed in the market: one month – 131.60; three months – 132.65; six months – 133.83.