Cooling tensions stir cautious market interest

By First Capital Research
Measured buying interest resurfaced in the secondary market yesterday, albeit less intense than the previous day, as investors continued to respond to signs of easing geopolitical tensions.
Given this backdrop, the one-year maturities traded between 7.96 percent to 8.02 percent. In terms of the 2028 maturities, 15.03.2028, 01.05.2028, 01.07.2028 and 15.10.2028 traded within the 8.82 percent to 8.95 percent range.
Moving ahead on the yield curve, 15.06.2029, 15.09.2029 and 15.12.2029 were seen changing hands between 9.45 percent and 9.70 percent. 
Yesterday, the Central Bank held its weekly T-bill auction, raising Rs.60.5 billion, marginally lower than the initial offer of Rs.65.0 billion. The three-month bill raised Rs.7.9 billion, falling behind its initial offer of Rs.25.0 billion, with the yield steady at 7.55 percent. The six-month bill raised Rs.38.1 billion, with its yield rising slightly by 2bps to 7.75 percent. The 12-month bill raised Rs.14.5 billion, narrowly missing the initial offer, while its yield remained unchanged at 7.94 percent. 
In the forex market, the Sri Lankan rupee appreciated against the greenback, closing at Rs.300.5/US dollar, compared to the previously seen rate of 301.1/US dollar. Meanwhile, overnight liquidity in the banking system expanded to Rs.116.6 billion from the previously seen low of Rs.110.7 billion.