Bond yields continue increasing trend despite 364 day bill WAvg declining

Monday, 8 December 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities The sentiment in secondary bond markets continued to be very bearish during the week ending 5 December, as yields continued to edge up in very thin trade. This was in spite of the weighted average on the 364 day bill reflecting a change for the first time in eight weeks to record a dip of 1 basis point to 5.99%. In secondary bond markets, yields on the eight year maturity of 01.07.2022 was seen increasing by around 10 basis points during the week to hit a weekly high of 8.30%, as some market participants were seen reducing duration by selling on the longer tenures and buying the 364 day bill.

In addition, selling interest saw yields on the 15.05.2017 maturity hit a high of 7.02%, the two 2018’s (i.e. 01.04.2018 and 15.08.2018) to highs of 7.20% and 7.30% respectively, the 01.07.2019 to 7.40% and the 01.05.2021 to 8.00%. In money markets, overnight call money and repo rates increased during the week to average 6.04% and 5.77% respectively as most market participants were seen utilising their option of accessing the SDF rate of 6.50% for three times a month during the beginning of this month. Liquidity was drained out by way of repo auctions during the week, for durations ranging from three days to 77 days at weighted averages of 5.97% to 6.10% as surplus liquidity averaged Rs. 38.25 billion for the week.

Downward trend on the rupee continues The rupee on spot next-next contracts depreciated further during the week to a weekly low of Rs. 131.99 against its previous week’s closing levels of Rs. 131.50/60 on the back of continued importer demand outweighing export conversions and remittances. The daily USD/LKR average traded volumes for the first four days of the week stood at $ 42.56 million. Some of the forward dollar rates that prevailed in the market were 1 month – 132.42; 3 months – 133.55 and 6 months – 134.67.