Short-end selling and long-end buying shape yield curve dynamics

By First Capital Research

As the final week of January-2026 began, the secondary market registered limited trading activities with moderate trading volumes. 

Some short-tenure maturities depicted selling pressure, while some buying interest from foreign banks was observed towards the long-end of the curve. 

In terms of trades, 01.05.2028 traded in the range of 9.14 percent-9.21 percent and 15.09.2029 traded in the range of 9.65 percent-9.67 percent. Over the long-term, the 15.06.2035 maturities changed hands between 10.93 percent-10.98 percent. 

Moreover, the PDMO announced an issue of Rs.205.0 billion worth of T-bonds through an auction on January 29, 2026. At the auction, Rs.60.0 billion, Rs.80.0 billion and Rs.65.0 billion worth of T-bonds are to be issued under the 01.03.2030, 15.06.2034 and 01.07.2037 maturities, respectively. 

On the external front, the Sri Lankan rupee remained flat against the US dollar, closing at Rs.309.80/US dollar. Overnight liquidity in the banking system slightly expanded to Rs.169.74 billion, from Rs.166.13 billion recorded previously.