Buying stance persists, yield curve dips

By First Capital Research

Building on the previous week’s momentum, the market participants chose to maintain a buying stance, pushing the secondary market yield curve down across the board by c.10-15bps. 

This persisting buying stance led to increased trading activity and high volumes. 

The secondary market interest was predominantly in the 2028, 2029, 2030, 2031 and 2032 maturities. Accordingly, at the belly end of the curve, the 15.02.2028, 15.03.2028 and 01.05.2028 maturities traded at the rate of 9.90 percent, whilst the 01.09.2028, 01.10.2028, 15.06.2029 and 15.12.2029 bonds traded at the rates of 9.95 percent, 10.00 percent, 10.35 percent and 10.40 percent, respectively. 

Meanwhile, the 15.10.2030 maturity traded at the rate of 10.70 percent and the 15.03.2031, 15.12.2032 and 15.05.2034 maturities traded at the rates of 11.00 percent, 11.15 percent and 11.34 percent, respectively. 
On the external front, the Sri Lankan rupee depreciated against the US dollar, closing at Rs.295.8/US dollar, compared to Rs.295.4/US dollar recorded the previous day. 

Furthermore, the Central Bank holdings of government securities remained stagnant at Rs.2,511.9 billion and overnight liquidity of the banking system contracted to Rs.181.7 billion, from Rs.188.6 billion recorded the previous day.