Yields shift slightly as secondary market rallies on US tariff cut

By First Capital Research

Yesterday, the secondary market saw heightened investor interest, marked by elevated trading volumes and robust activity, following the further reduction in US tariff rates on Sri Lankan imports to 20%.

This renewed interest led to a modest shift in the yield curve, reflecting strong buying momentum across maturities.

At the short end of the curve, bonds maturing on 01.05.2028, 15.10.2028, and 15.12.2028 saw yields ranging from 8.72% to 8.95%. For 2029 maturities, including 15.09.2029, 15.10.2029, and 15.12.2029, yields were observed between 9.35% and 9.45%. In the belly of the curve, 15.05.2030 and 01.07.2030 were traded with yields between 9.50% and 9.65%. Further along the curve, 15.03.2031 traded between 9.90% to 9.95%, while 15.12.2032 saw yields between 10.25% and 10.30%. Meanwhile, both 01.06.2033 and 01.11.2033 maturities were exchanged at 10.65%. Finally, the 15.09.2034 maturity changed hands at 10.80%.

In the forex market, the LKR appreciated against the greenback, closing at LKR 302.19/USD, compared to the previously seen rate of LKR 302.21/USD. Meanwhile, overnight liquidity in the banking system contracted to LKR 76.3Bn from the previously seen level of LKR 114.1Bn.