Short tenure bond yields continue to increase

 By Wealth Trust Securities 

The short end of the yield curve witnessed an upward movement yesterday on the back of considerable foreign selling interest as activity picked up in the secondary bond market. 

Yields on the two 2018s (15.10.18 & 15.11.18), 15.09.19,01.05.20 and 01.03.21 were seen increasing to intraday highs of 11.15%, 11.17%, 11.51%, 11.70% and 11.75% respectively against its days opening lows of 11.12%, 11.15%, 11.46%, 11.60% and 11.65%. In addition, the 01.01.24 and 01.08.26 maturities changed hands within the range 11.85% to 11.90% and 11.90% to 11.95% as well.

In secondary bill markets, April 2017 maturities changed hands within the range of 9.72% to 9.76% while August 2017 bills continued to get offered at levels of 10.35%. 

The Open Market Operations (OMO) department of Central Bank was seen infusing an amount of Rs 40 billion yesterday by way of an overnight reverse repo auction at a weighted average of 8.50% as the overall net liquidity shortfall stood at Rs 41.54 billion. Call money continued to remain stagnant to average 8.42% while repo averaged 8.71%.

Rupee steady

The USD/LKR rate on the spot next contract was seen closing the day broadly steady yesterday at Rs 147.40/50 against its previous day’s closing subsequent to dipping to an intraday low of Rs 147.55 on the back of foreign selling in Rupee bonds and importer demand. The total USD/LKR traded volume for 19 October was $ 64.6 million. 

Given are some forward USD/LKR rates that prevailed in the market: one month – 148.25/35; three months – 149.95/05; six months – 152.40/50.