Secondary bond market yields dip marginally as inflation drops

Monday, 1 September 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Point to point inflation declined to 3.5% for the month of August, contrary to market expectations, from 3.6% recorded in July. This further resulted in the annual average inflation dipping to a 50 month low of 4.5% from 4.7% recorded in July.

In line with the outcome of inflation and the weekly Treasury bill auction results, where the weighted averages remained unchanged against market expectations, secondary market bond yields decreased marginally during the week to close lower than the previous week’s closing levels. A majority of trading witnessed, consisted of the liquid maturities of 1 May 2021 and 1 July 2022 as it closed the week at levels of 8.30/37 and 8.40/50 subsequent to hitting weekly highs of 8.60%. This was closely followed by the 1 January 2024 maturity which closed the week at 8.50/60 against its previous week’s level of 8.55/65. In addition, the 2016, 2017 and 2018 maturities changed hands within the range of 7.00% to 7.10%, 7.30% to 7.40% and 7.50% to 7.60% respectively. Meanwhile in secondary bill markets, the January 2015 and July 2015 maturities were seen changing hands at levels of 6.35% to 6.40% and 6.35% to 6.45% respectively. In the money market, overnight call money and repo rates remained steady to average 6.70% and 6.52% respectively as average surplus liquidity

stood at Rs. 43.35. rupee dips marginally The rupee was seen dipping marginally during the week to close the week at Rs. 130.20/23 against its previous weeks closing of Rs. 130.18/20 on the back of importer demand. The daily average USD/LKR traded volume for the first four days of the week ending 29 August was at $ 52.49 million. Some of the closing forward dollar rates that prevailed in the market were 1 month – Rs. 130.62; 3 months – Rs. 131.21 and 6 months – Rs. 132.22.