Secondary market bond yields take U-turn ahead of policy meeting

By Wealth Trust Securities

The increasing trend in secondary market bond yields witnessed over the past few days came to a halt yesterday as yields even dipped marginally ahead of the Central Bank’s monthly policy announcement due today.

Activity was witnessed across the yield curve on the three-year, four-year, five-year and six-year maturities at levels of 12.70% - 12.75%, 12.80% - 12.83%, 12.75% - 12.80% and 13.38% - 13.42% respectively as the four-year, five-year and six-year maturities reflected dips of around 10 basis points in comparison to its previous day’s closing levels.

Furthermore, the buying interest shown on secondary market bills was considered adequate enough in order for weighted averages to remain somewhat steady at today’s weekly Treasury bill auction.

Liquidity reverses to a negative for the first time in one week

Overnight call money and repo rates remained mostly unchanged to average 10.53% and 9.66% respectively despite overnight liquidity reversing to a net deficit of Rs 1.04 billion yesterday.

The Central Bank refrained from conducting any overnight OMO action for a third consecutive day, on a day where Rs. 1.47 billion was injected by the Central Bank through its policy rate of 9.75%.

Rupee steady

The dollar rupee rate closed the day mostly unchanged at Rs. 128.85 on the back of thin volumes. The total dollar/rupee volume for the previous day (10 December 2012) was US$ 39.30 million. Given below are some forward dollar rates that prevailed in the market: one month – 130.11; three months – 132.21 and six months – 135.66.