Renewed buying interest drives yields lower across the curve

By First Capital Research

Pivoting from the subdued sentiment seen in the previous week, the secondary market began the month with renewed buying interest, leading to moderate trading volumes. 

However, investor sentiment at the short end of the yield curve remained mixed. Overall, yields trended downward across the yield curve.

Amongst the traded maturities, 15.02.2028 and 15.03.2028 traded between the rates of 9.90% to 9.85% whilst 15.10.2028 traded at the rate of 9.95%. Meanwhile, 15.06.2029, 15.09.2029 and 15.12.2029 traded at the rates of 10.38% to 10.25%. Additionally, 15.03.2031 traded between the rates of 10.90% to 10.80%. 

Meanwhile, the Department of Census and Statistics released the CCPI inflation data for Apr-25, showing an uptick to -2.0%, compared to -2.6% in Mar-25. This movement remains well aligned with CBSL’s inflation target of 5.0% medium to long term.

In the foreign exchange market, the LKR continued its modest appreciation against the USD for the 3rd consecutive day, closing at Rs. 299.57/USD, compared to the previous day’s rate of 299.62/USD. Meanwhile, overnight liquidity in the banking system contracted to Rs.163.3bn from Rs.168.9bn in the previous session.