Market uncertainty drives inclines in yield curve

By First Capital Research

The secondary market yield curve faced selling pressure continuing from the previous days, driven by market uncertainty as participants awaited clearer direction into the potential impact of the US reciprocal tariff on the Sri Lankan economy. 

As a result, the yield curve saw an uptick of nearly 10-15bps across the board. Market activity remained moderate, with moderate volumes. Among the traded maturities, short-tenure bonds such as 15.09.2027 and 15.12.2027 were traded at 10.00 percent and 10.05 percent, respectively. Towards the belly end of the curve, the 15.02.2028, 15.03.2028, and 01.05.2028 maturities were traded at 10.20 percent, 10.25 percent and 10.35 percent, respectively, while both the 15.10.2028 and 15.12.2028 maturities traded at the rate of 10.50 percent. 

Furthermore, the 15.09.2029, 15.12.2029 and 15.03.2031 maturities, traded at the rates of 10.70 percent, 10.80 percent and 11.10 percent, respectively. Meanwhile, the Central Bank announced a Rs.100.0 million worth T-bond auction, scheduled for April 10, 2025. 

In the forex market the Sri Lankan rupee showcased an appreciation against the greenback, standing at Rs.296.8/US dollar in comparison to Rs.296.9/US dollar registered on the previous day. 

Meanwhile, overnight liquidity in the banking system rose to Rs.202.8 billion, from Rs.191.2 billion seen previous day, whilst the Central Bank holdings of government securities remained stagnant.