Secondary market bond yields closes steady ahead of monthly policy announcement

Monday, 11 November 2013 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in the secondary bond market remained high during the week ahead of this month’s monetary policy announcement due today, 11 November, with yields seesawing mainly of the two liquid 2018 maturities (i.e. 1 April 2018 and 15 August 2018) and the 1 January 2017. The yields registered weekly highs of 11.06%, 11.10% and 10.88% respectively and lows of 10.97%, 11.05% and 10.68%. Considerable sales were witnessed as a result of profit taking leading to an upward shift of the yield curve.

However, buying interest during the latter part of the week coupled with a ‘wait-and-see’ approach adopted by most participants resulted in yields dipping to weekly lows and closing the week at levels of 10.97/99, 11.06/08 and 10.68/72 respectively. In addition the 1 April 2016 maturity was seen changing hands at levels of 10.35% to 10.42%. During the week the weighted averages at the weekly Treasury bill auction declined for a seventh consecutive week to 8.94% and 9.82% respectively on the 182 day and 364 day bills. In the secondary bill market the May 2014 bills changed hands within a range of 8.90% to 9.00% and the 364 day bill within 9.78% to 9.80%, reflecting continued buying interest. Meanwhile in money markets, surplus liquidity increased towards the later of the week to close the week at Rs. 27.42 b as overnight call money and repo rates remained steady to average 7.77% and 7.07% for the week. The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of seven day term repo auctions at weighted averages ranging from 7.46% to 7.47%. Rupee loses ground marginally The rupee lost ground to an intra-week low of Rs. 131.10 on the back of import led demand and remained steady at these levels during the latter part of the week as selling interest set in. The total USD/LKR traded volume for the first four days of this week stood at US $ 68.34 million. Some of the forward dollar rates that prevailed in the market were one month – 131.90; three months – 133.55; and six months – 135.70.