Friday, 20 December 2013 00:01
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By Wealth Trust Securities
Secondary market bond yields took a U-turn yesterday as yields were seen edging up considerably. Activity mainly surrounded the liquid two 2018’s (i.e. 01.04.208 and 15.08.2018) as it was seen hitting intraday highs of 10.10% and 10.15% respectively against its previous day’s closing levels of 9.76/79 and 9.80/83 and closed the day at 10.00/05 and 10.04/08 once again.
The Federal Reserve Open Market Committee (FOMC) decision to trim down its monthly bond buying program to $ 75 billion from its present $ 85 billion effective January 2014, known as quantitative easing (QE3) in order to support its economy was seen as the main reason behind the increase in yields according to market sources.
However in secondary bill markets, maturities centering the 364-day bill continued to change hands within the range of 8.35% to 8.40% while January 2014 bills traded within 7.40% to 7.50%.
The overnight call money and repo rates remained steady to average 7.73% and 7.08% respectively as surplus liquidity dipped marginally to Rs. 12.90 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen carrying out two outright auctions and a term repo auction yesterday, totalling Rs. 13 billion for durations of 56-days, 63-days and 35-days respectively, in order to mop up liquidity. However, only an amount of Rs. 7.2 billion in total was drained out at WAvg’s of 7.28% and 7.61% on the 56-day and 35-day maturities respectively value dated today while the 63-day auction did not receive any bids. In addition, an amount of Rs. 12.9 billion was seen been deposited at its window rate of 6.50%.
