Treasury yields take a U-turn

Monday, 27 January 2014 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Activity in secondary bond markets increased substantially towards the latter part of the week mainly on Friday (24) as yields plunged due to buying interest returning back to the market, reversing an upward trend that was witnessed during the start of the week. The upward trend was fuelled by the outcome of the weekly Treasury bill auction, where weighted averages remained unchanged for the first time in seventeen (17)

weeks on the 182-day and 364-day maturities at 7.02% and 7.15% with the total accepted amount been lower than the total offered amount for the first time in thirteen (13) weeks as well coupled with profit taking. Trades were mainly seen on the liquid two 2018 maturities (i.e. 01.04.208 and 15.08.2018) and on the liquid two 2019 maturities (i.e. 15.01.19 and 01.07.2019) from weekly highs of 9.30%, 9.35%, 9.32% and 9.35%

respectively to lows of 8.85%, 9.00%, 9.15% and 9.18%. In addition the maturities of 01.04.16, 01.08.16 and 01.01.2017 were seen trading at highs of 8.25%, 8.40% and 8.80% to a low of 8.10%, 8.20% and 8.40%. However, selling pressure on secondary market bills was evident during the week as durations close to the 364-day maturity was seen trading above its weighted average. Meanwhile in money markets, surplus liquidity increased towards the later of the week to close the week at Rs. 66.12 billion as overnight call money and repo rates remained steady to average 7.41% and 6.83% for the week. The Open Market Operations (OMO) department of Central Bank was seen mopping up liquidity on a term basis during the week as it carried out four term repo auctions, totalling Rs. 37.28 billion for durations ranging from 3 days to 35 days at WAvgs of 6.65% to 6.82%. Rupee appreciates marginally during the week The rupee gained ground marginally during the week to close the week at Rs. 130.70/72 in comparison to its previous weeks closing levels of Rs. 130.73/75 on the back of exporter dollar sales. The daily average USD/LKR traded volume for the first four days of the week was at $ 67.37 million. Some of the forward dollar rates that prevailed in the market were 1-Month: Rs. 131.10, 3-Months: Rs. 131.81 and 6-Months: Rs. 132.96.