Bond yields continue downward slope ahead of weekly auction
Wednesday, 4 June 2014 00:00
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By Wealth Trust Securities
The bond market continued its bullish run for a ninth consecutive trading day as secondary market yields were seen dipping further ahead of today’s weekly Treasury bill auction.
Activity spread along the yield curve from one-and-a-half year maturities of 2015 to eight-year maturities of 2022 as considerable volumes were seen changing hands once again.
A bulk of the activity centered around the two 2018 maturities (i.e. 1 July 2019 and 1 November 2019) and the 1 July 2019 maturity as its yields were seen hitting intraday lows of 8.30%, 8.39% and 8.83% respectively against its days opening highs of 8.36%, 8.44% and 8.88%.
This was closely followed by the 2016, 2017, 2021 and 2022 maturities as its yields were seen dipping as well to trade within the ranges of 7.28% to 7.45%, 7.85% to 7.94%, 9.48% to 9.52% and 9.88% to 9.90% respectively.
All this was ahead of today’s weekly Treasury bill auction, at where a four week low total amount of Rs. 10 billion will be on offer consisting of Rs. 1 b on the 91 day, Rs. 3 b on the 182 day and Rs. 6 b on the 364 day maturities.
At last week’s auction, weighted averages (WAvgs) on the 182 day and 364 day maturities remained steady at 6.75% and 7.02% respectively while the WAvg on the 91 day bill dipped by one basis point to 6.56%. In secondary bill markets, October 2014 maturities were seen changing hands within the range of 6.60% to 6.65%, February within 6.80% to 6.82% and May within 6.90% to 6.95%.
Surplus liquidity in money markets remained at a healthy surplus of Rs 19.81 Bn yesterday as overnight call money and repo rates remained steady to average 6.96% and 6.51% respectively. Meanwhile, the Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 14.44 b on a three day basis at a WAvg of 6.60% while a further amount of Rs. 5.41 b was deposited at its Standing Deposit Rate (SDR) of 6.50%.
Rupee remains steady
The dollar/rupee rate closed the day steady at Rs. 130.35/37 yesterday as markets were at equilibrium. The total USD/LKR traded volume for the previous day (2 June) stood at $ 62.93 million.
Some of the forward dollar rates that prevailed in the market were: one month – 130.81; three months – 131.65; and six months – 132.87.
