Secondary market bond yields decline for the first time in seven days

• Robust outcome of bond auctions turns markets bullish

By Wealth Trust Securities

The secondary bond market was seen reversing an increasing trend witnessed over the past seven trading days, as yields were seen declining yesterday on the back of considerable buying interest withstanding any foreign selling during the day. 

The outcome of the two Treasury bond auctions conducted yesterday where weighted averages recorded a strong reading of 6.70% on the two-year maturity and 7.18% on the 3.05-year maturity, contributed to this reversal in sentiment as well.

Activity continued to remain high during the day, as yields on the liquid maturities of 01.06.2018, 01.08.2021, 01.09.2023 and 15.03.2025 were seen declining to intraday lows of 7.70%, 9.00%, 9.15% and 9.25% respectively against its day’s opening highs of 8.00%, 9.20%, 9.35% and 9.40%.  This was ahead of today’s weekly Treasury bill auction, where a total amount of Rs. 22 billion was on offer consisting of Rs. 2 billion, Rs. 10 billion and Rs. 10 billion on the 91-day, 182-day and 364-day maturities respectively. 

At last week’s auction, the weighted average on the 364-day bill reduced by 01 bp to 6.28% for the first time in four weeks while the weighted averages on 91-day and 182-day bills remained unchanged at 6.08% and 6.18% respectively. 

Meanwhile, in money markets, overnight call money and repo rates remained mostly unchanged to average 6.10% and 5.83% respectively despite surplus liquidity decreasing further to Rs. 62.50 billion yesterday.

 Rupee remains steady 

The USD/LKR rate on spot contracts remained steady to close the day at Rs. 133.90 yesterday. The total USD/LKR traded volume for 22 June was $ 37.45 million.  Some of the forward dollar rates that prevailed in the market were 3 months - 135.30/70 and 6 months - 137.20/70.