Auction yields dip, yield curve holds steady

By First Capital Research

After the overnight policy rate cut, the Central Bank held its first weekly T-bill auction yesterday, fully raising the offered Rs.162.5 billion. 

Notably, the weighted average yield rates came across the board with three-month T-bill falling by 10bps and the six-month and 12-month bills falling by 20bps and 31bps, respectively. 

Accordingly, the weighted average yields for the three-month, six-month and 12-month T-bills stood at 7.55 percent, 7.77 percent and 7.98 percent, respectively. 

The secondary market witnessed mixed activity yesterday, with the yields on short to mid-tenure maturities declining, while the mid to long-tenure yields remained broadly unchanged, resulting in high market volumes. 

Accordingly, the 01.05.2028 and 01.07.2028 maturities traded at the rate of 9.00 percent whilst 15.10.2028 and 15.06.2029 traded at the rates of 9.07 percent and 9.50 percent, respectively. 

Furthermore, 15.09.2029, 15.12.2029 and 15.05.2030 changed hands at the rates of 9.52 percent, 9.55 percent and 9.65 percent, respectively. Additionally, 15.03.2031 and 15.12.2032 traded at the rates of 9.90 percent and 10.20 percent.  

In the forex market, the Sri Lankan rupee depreciated marginally against the greenback, closing at Rs.299.7/US dollar, compared to the previously seen rate of Rs.299.6/US dollar. Meanwhile, overnight liquidity in the banking system contracted to Rs.196.1 billion, from Rs.203.2 billion in the previous session.