Parallel shift upwards on yield curve for second consecutive week

Monday, 24 November 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Considerable selling interest across the yield curve coupled with certain uncertainty that crept into markets towards the latter part of the week ending 21 November saw secondary market bond yields increase, reflecting a parallel shift upwards on the overall yield curve for a second consecutive week.

Activity during the first four days of the week centered on the two 2018 maturities (i.e. 1 April 2018 and 15 August 2018) as its yields were seen hitting highs of 7.10% and 7.20% respectively, the 1 July 2019 to 7.25%, the 1 May 2021 to 7.70%, the 1 July 2022 to 8.10% and the 1 January 2024 to 8.25%. However, two way quotes were seen widening towards the latter part of Friday to close the week considerable higher than its previous week’s closings. Meanwhile, the weighted average on the 364 day bill remained stagnant at 6.00% for a sixth consecutive week at its weekly bill auction. In money markets, overnight call money and repo rates averaged 6.00% and 5.50%, as surplus liquidity increased to a high of Rs. 27.73 billion on Friday from its weekly low of Rs.3.65 billion recorded on Thursday. 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 5.89% to 6.03%. Rupee dips during the week The rupee on spot next and spot next-next contracts was seen losing ground during the week to close the week at Rs. 131.20/30 and Rs. 131.25/40 respectively on the back of importer demand. The daily average USD/LKR traded volume for the first four days of last week was $ 60.73 million. Some of the closing forward dollar rates that prevailed in the market were; one month – 131.68; three months – 132.70; and six months – 133.90.