Secondary bond markets remain bullish on upbeat statistics
Tuesday, 1 July 2014 00:59
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By Wealth Trust Securities
The expectations and final outcome on inflation for the month of June coupled with speculation on next month’s monetary policy announcement in line with the newly-released monetary sector credit numbers saw secondary market bond yields dip further yesterday amidst heavy trading activity.
Inflation for the month of June continued its decreasing trend as the point to point was seen hitting a 28 month low of 2.8% against its previous month’s figure of 3.2% while its annualised average decreased to a 46 month low of 4.9% against its previous month’s figure of 5.3%.
In the monetary sector, credit to the private sector from commercial banks continued to decline reflecting a dip of Rs. 15.7 billion in April followed by a decrease in net credit to the Government by Rs. 6.8 while credit to corporations reflected a marginal increase of Rs. 1.1 b.
Secondary market yields were seen dipping across the yield curve mainly on the market favourite maturities of 15 May 2017, 1 April 2018, 15 August 2018, 1 July 2019, 1 May 2021 and 1 July 2022 to intraday lows 7.43%, 8.04%, 8.10%, 8.50%, 9.08% and 9.55% respectively against their previous day’s closing levels of 7.52/54, 8.15/18, 8.24/27, 8.62/64, 9.23/26 and 9.72/76. However, selling interest towards the latter part of the day on profit taking throttled any further downward movement.
Meanwhile in money markets, overnight call money and repo rates remained steady to average 6.96% and 6.54% respectively despite surplus liquidity decreasing to Rs. 13.56 billion yesterday. The Open Market Operations (OMO) department of Central Bank was seen mopping up an amount of Rs. 6.65 b on an overnight basis at a weighted average rate of 6.54%, while a further Rs 6.91 b was deposited at Central bank’s Standing Deposit Facility Rate (SDFR) of 6.50%.
Rupee remains steady
The dollar/rupee rate was seen closing the day steady at Rs. 130.33/35 yesterday as markets were at equilibrium. The total USD/LKR traded volumes for 27 June stood at $ 59.77 million. Some of the forward dollar rates that prevailed in the market were: one month – 130.78; three months – 131.64; and six months – 132.74.
