Secondary market bond yields increase ahead of monetary policy announcement

Monday, 23 February 2015 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Overall activity in the secondary bond market improved towards the later part of the week ending 20 February as yields were seen increasing gradually, ahead of the monetary policy announcement for the month of February, which is due on Tuesday. This increase in yields was further supported by the results of the weekly Treasury bill auction, where weighted averages of all three maturities increased for the third consecutive week.

The overall yield curve witnessed a shift upwards with the liquid maturities of 01.04.2018, 15.08.2018 and 01.07.2022 hitting weekly highs of 7.33%, 7.40% and 7.93% respectively against its previous weeks closing levels of 7.10/13, 7.14/18 and 7.68/70. Furthermore, quotes on the nine-year maturity of 01.01.2024 were seen rising to levels of 8.20/30 against 8.12/18 and the two year maturity of 15.05.2017 to 7.14/18 against 7.01/15. In secondary bill markets, the November 2015 maturity changed hands at 6.20% and the July 2015 bill within a range of 6.05% to 6.10%. Meanwhile in the money market, overnight call money and repo rates decreased during the week to average 6.03% and 5.67% respectively as surplus liquidity in the market increased to average Rs. 35.92 billion. The Open Market Operations (OMO) Department of Central Bank was seen mopping up liquidity during the week by way of two to seven day term repo auctions at weighted averages ranging from 5.91% to 5.96%. Rupee dips marginally A change in the placement rate of spot and spot next contracts to Rs. 132.90 and Rs 132.92 respectively against its previous levels of Rs. 132.80 and Rs. 132.82 saw the rupee dip marginally during the week, with activity remaining very dull. The daily USD/LKR average traded volume for the first three trading days of the week stood at $ 53.15 million. Some of the forward dollar rates that prevailed in the market were 1 month - 133.60; 3 months - 134.70 and 6 months - 136.15.