Selling sentiment persists, yields stay resilient

By First Capital Research

Following the conclusion of the second monetary policy review for 2025, during which the overnight policy rate (OPR) was left unchanged, the secondary market saw sustained selling pressure. 

This trend extended from the previous day, as market participants adjusted their positions and exhibited continued selling interest. Nevertheless, the yield curve remained relatively stable, with considerable trading activity and moderate volumes.

At yesterday’s T-bill auction, the weighted average yields remained stable. Total bids accepted amounted to Rs.73.38 billion, falling short of the initially offered sum of Rs.100.50 billion. Specifically, Rs.4.81 billion was raised in the three-month T-bills, Rs.31.20 billion in the six-month T-bills and Rs.37.37 billion in 12M T-bills. The weighted average yields for the three-month, six-month and 12-month maturities remained unchanged at 7.50 percent, 7.84 percent and 8.25 percent, respectively.

The secondary market yield curve showed minimal movement, despite the prevailing selling sentiment yesterday. The 15.09.2027 maturity traded between 9.37 percent to 9.50 percent. Moving ahead, the 15.02.2028 and 01.05.2028 maturities traded within the range of 9.75 percent to 9.85 percent while the 15.10.2028 and 15.12.2028 maturities traded between 9.95 percent to 10.05 percent. Moreover, the 15.09.2029 and 15.12.2029 maturities transacted between 10.20 percent and 10.30 percent. Finally, the 15.10.2030 maturity traded between 10.30 percent to 10.40 percent while the 01.07.2032, 01.10.2032 and 15.12.2032 all traded within the range of 10.60 percent to 10.90 percent. 

In the forex market, the Sri Lankan rupee appreciated against the greenback and stood at Rs.296.6/US dollar, compared to Rs.296.7/US dollar recorded on the previous day. Meanwhile, overnight liquidity in the banking system contracted to Rs.167.0 billion, from Rs.169.7 billion recorded on the previous day.