Yield curve witnesses mixed fortunes during the week

By Wealth Trust Securities

The secondary market bond yield curve witnessed mixed fortunes during the week ending 2 June, as yields on the shorter end of the curve was seen decreasing marginally week on week while yields on the mid-term maturities increased. 

The drop in inflation figures for the month of May and the positive outcome of the weekly Treasury bill auction where weighted average yields decreased across the board saw yields on shorter maturities of 15.11.18, 15.01.19, 01.05.19 and 01.07.19 dipping to lows of 10.80%, 10.90%, 11.02% and 11.07% respectively against their opening levels of 10.85/00, 11.00/05, 11.05/15 and 11.10/20.  

However, on the mid-term maturities, the 01.09.23, 01.01.24, 01.08.24 and 01.08.26 yields were seen increasing to weekly highs of 11.67%, 11.76% and 11.75% each respectively against its previous weeks closing levels of 11.60/65, 11.60/67, 11.62/67 and 11.67/70 while the 15.12.21 maturity was seen changing hands at levels of 11.45% to 11.51% against its previous weeks closing level of 11.43/47. However once again, subsequent buying interest resulted in yields pushing lower at the close of the week. 

In the secondary bill market, the 182 day bill was continue to be quoted at levels of 10.20/33 while the foreign holding in Rupee bonds was seen increasing by a further Rs. 740 million for the week ending 31 May.

The daily secondary market Treasury bond transacted volumes for the first four days of the week averaged Rs. 5.08 billion. 

In money markets, net liquidity was seen decreasing towards the latter part of the week as the OMO Department of the Central Bank of Sri Lanka was seen infusing liquidity through an overnight Reverse Repo auction to the market on Friday at a weighted average rate of 8.75% against the overnight repo auctions it conducted during the early part of the week within the range of 7.26% to 7.28%. The overnight call money and repo rates averaged 8.73% and 8.81% respectively, for the week. 

Rupee closes stronger 

The USD/LKR rate on spot contracts were seen closing the week mostly unchanged at Rs. 152.85/90, subsequent to hitting a low of Rs. 153.05. 

The daily USD/LKR average traded volume for the four days of the week stood at $ 60.44 million. 

Some of the forward dollar rates that prevailed in the market were one month – 153.85/10; three months – 156.05/25 and six months – 159.00/30.