Secondary market bond yields continue to plunge

Friday, 18 July 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Considerable buying interest across the yield curve saw secondary market bond yields plunge further yesterday, mainly driven by the seven year duration of 1 May 2021 and the eight-year duration of 1 July 2022 as its yields were seen hitting intraday lows of 8.30% and 8.60% respectively against its opening highs of 8.56% and 8.85%.

In addition, the nine-and-a-half-year duration of 1 January 2024 was seen dipping to a low of 8.83% against its opening high of 8.95% closely followed by the 15-year duration to a low of 10.00% against its opening high of 10.25%. Furthermore, on the shorter leg of the yield curve, the two 2018 maturities (1 April 2018 and 15 August 2018) were seen hitting lows of 7.55% and 7.60% respectively against its opening highs of 7.60% and 7.70% while the five-year maturity of 1 July 2019 dipped to a low of 7.77% against a high of 7.87%. Meanwhile, scarcity of supply saw the 364 day bill change hands within the range of 6.65% to 6.68% yesterday. Surplus liquidity in money markets continued to remain high yesterday at Rs. 48.96 billion as Rs. 29.63 b was seen deposited at Central Bank’s Standing Deposit Rate (SDR) of 6.50% while a further Rs. 19.33 b was absorbed through an overnight repo auction conducted by the Open Market Operations (OMO) department at a weighted average of 6.50%. However, liquidity is expected to dip today due to a total amount of 56.3 b being mopped up through three term repo auctions for durations of 35 days, 56 days and 77 days at weight averages of 6.53%, 6.58% and 6.64% respectively. Rupee dips marginally on importer demand The rupee was seen dipping marginally by two cents yesterday to Rs. 130.22/24 on the back of importer dollar demand against its previous day’s closing of Rs. 130.20/21. The total USD/LKR traded volumes for 16 July stood at $ 58.58 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.43; three months – 131.06; and six months – 132.16.