Secondary market yields continue to increase ahead of weekly bill auction

By Wealth Trust Securities

The secondary market for Treasury bonds remained bearish as yields was seen increasing further yesterday ahead of the weekly Treasury bill auction due today on the back of selling interest. 

The liquid maturities of 1 June 2018, 1 May 2020, 1 August 2021, 1 September 2023 and 1 June 2026 were seen hitting intraday highs of 8.40%, 9.42%, 9.75%, 10.00% and 10.55% respectively against its days opening lows of 8.31%, 9.37%, 9.65%, 9.95% and 10.45%.

In secondary bill markets, February 2016 and August 2016 bills were quoted at levels of 7.00/20 and 7.10/30 respectively. 

At today’s weekly bill auction, a total amount of Rs. 12 billion will be on offer consisting of Rs. 3 b on the 91 day, Rs. 4 billion on the 182 day and Rs. 5 b on the 364 day maturities. 

At last week’s auction, the weighted averages increased across all three maturities to 6.53%, 6.87% and 6.97% respectively. 

CBSL OMO department resumes reverse 

repo auctions

Meanwhile in money markets, overnight call money and repo rates increased further to average 6.31% and 6.34% respectively despite surplus liquidity in the market increasing to Rs. 36.73 b yesterday. 

The Open Market Operations (OMO) department of Central Bank was seen infusing an amount of Rs. 12.03 billion yesterday at a weighted average of 6.25% by way of an overnight reverse repo auction after a lapse of three trading days. 

Rupee remains stable 

The USD/LKR rate on spot contracts remained steady to close the day at Rs. 134.50 yesterday. The total USD/LKR traded volume for 31 August was $ 48.50 million. Given are some forward USD/LKR rates that prevailed in the market: one month – 135.14/24; three months – 136.32/42; six months – 138.14/24.