Downward trend in secondary bond market yields continue amidst thin volumes
Tuesday, 17 September 2013 00:46
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By Wealth Trust Securities
The downward trend on bond yields in secondary markets continued yesterday as well, with the liquid two five year maturities (i.e. 1 April 2018 and 15 August 2018) hitting daily lows of 11.87% and 11.90% respectively on the back of thin volumes in comparison to Friday’s closing levels of 11.91/93 and 11.92/98 respectively. However profit taking at these levels, curtailed any further downward movement as it was seen closing the day at levels of 11.88/90 and 11.90/94 once again.
In addition, yields on the liquid two, two year maturities (i.e. 15 March 2015 and 15 July 2015) dipped as well as it was seen hitting intraday lows of 11.15% and 11.25% respectively to close the day at levels of 11.10/18 and 11.22/27. However most market participants were seen staying on the sidelines awaiting this month’s monetary policy decision due today and the outcome of the Federal Reserve meeting to be held today and tomorrow.
The downward trend in bond markets was further supported by the reduction in the offered amounts for today’s weekly Treasury bill auction as an total amount of only Rs. 5 billion will be on offer, the lowest total amount since 29 December 2010. Rs. 1 billion on the 91-day, Rs. 0.5 billion on the 182-day Rs. 3.5 billion on the 364-day maturities will be on offer as weighted averages at last week’s auction remained mostly unchanged for a third consecutive week at 8.61%, 9.64% and 10.57% respectively on the three maturities.
In secondary bill markets, maturities centering on the 364-day continued to be quoted at levels of 10.53/58 while June and July 2014 bills were seen changing hands within the range of 10.48% to 10.51% and 10.52% to 10.54% respectively.
Meanwhile in money market the overnight call money and repo rates remained steady to average 8.53% and 8.10% respectively as surplus liquidity in the money markets increased marginally to Rs. 15.69 billion. The Open market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 5 billion on an overnight basis by way of a Repo auction at a WAvg of 7.15% while a further Rs. 2.9 billion was mopped up for a period of seven days at a WAvg of 7.96% as well. In addition, an amount of Rs. 7.79 billion was seen been deposited at CBSL’s Repo window at 7.00%.
Rupee remains steady
In Forex markets, the USD/LKR rate remained steady; to close the day at Rs. 132.25 / 132.30 as markets reflected a demand/supply equilibrium. The total USD/LKR traded volume on 13 September 2013 stood at $ 25.45 million.
