Caution prevails; 2028 yields tick up slightly

By First Capital Research

Amid the ongoing geopolitical uncertainties, the market remained cautious, maintaining a prudent wait-and-see approach amid the mixed sentiment. 

In this environment, the yield curve edged slightly higher from the 2028 maturities. 

At the short end of the yield curve, 15.09.2027 traded at 8.55 percent. Amongst the 2028 maturities, 15.02.2028 traded between 8.82 percent and 8.85 percent while 15.03.2028 traded at 8.90 percent. 

Moreover, both 01.05.2028 and 01.07.2028 were seen changing hands at 8.93 percent while 15.10.2028 traded at 8.95 percent. 

Moving ahead, 15.09.2029 was seen trading at 9.49 percent while 15.12.2029 traded at 9.54 percent. Finally, 15.03.2031 traded at a rate of 10.05 percent.

Yesterday, the Central Bank held its weekly T-bill auction, raising Rs.114.6 billion — below the initial offer of Rs.132.0 billion. The three-month bill raised Rs.31.0 billion, exceeding its initial offer of Rs.20.0 billion, with the yield steady at 7.55 percent. The six-month bill raised Rs.64.3 billion, also above the initial offer, with its yield rising slightly by 1bps to 7.73 percent. The 12-month bill raised only Rs.19.2 billion, well below the initial Rs.50.0 billion offer, while its yield remained unchanged at 7.94 percent. 

In the forex market, the Sri Lankan rupee depreciated marginally against the greenback, closing at Rs.300.84/US dollar, compared to the previously seen rate of 300.78/US dollar. Meanwhile, overnight liquidity in the banking system contracted to Rs.101.1 billion, from Rs.122.4 billion in the previous session.