Selling sentiment emerges; yields edge up marginally

By First Capital Research

Pivoting from Monday’s mixed sentiment, market participants shifted towards a selling stance yesterday, generating moderate volumes and high market activity ahead of the CBSL’s monetary policy review, which is due today. 

The secondary market yield curve edged up marginally compared to the previous week, influenced by the selling sentiment in the market. Accordingly, at the short end of the curve, 15.12.2026 was traded at 8.69%, whilst towards the belly end of the curve, 2028 maturities namely, 15.01.2028, 15.02.2028 and 15.03.2028 traded within the range of 9.75% to 9.80%. 

Furthermore, both 15.10.2028 and 15.12.2028 maturities traded within the range of 10.10% to 9.95%. Meanwhile, 15.06.2029, 15.09.2029 and 15.12.2029 maturities traded within the range of 10.15% to 10.35%. Additionally, 15.10.2030 and 15.12.2032 maturities traded at the rates of 10.40% and 10.75%, respectively. 

In the forex market, the LKR depreciated against the greenback and stood at Rs. 296.7/USD, compared to 296.6/USD recorded on the previous day. Meanwhile, overnight liquidity in the banking system contracted to Rs. 169.7bn from Rs. 184.1bn recorded on the previous day.