Persistent selling pushes curve higher

By First Capital Research
The market remained under selling pressure yesterday, resulting in higher yields across the curve, while trading activity stayed subdued throughout the session.
At the short end, the 01.07.2028 and 15.10.2028 maturities traded in the range of 10.10 percent-10.15 percent. Further along the curve, the 01.07.2030 maturity traded between 10.40 percent and 10.45 percent, while the 15.03.2031 maturity changed hands at 10.60 percent. 
In the long end, the 15.06.2034 maturity traded at 11.45 percent and the 15.08.2036 maturity traded at 11.50 percent.
The PDMO raised Rs.67.2 billion at yesterday’s T-bill auction, below the initially offered amount of Rs.140.0 billion, despite total bids reaching Rs.232.3 billion. The PDMO accepted bids lower than the offered for all three maturities with three-month, six-month and 12-month bills at Rs.46.1 billion, Rs.16.4 billion and Rs.4.7 billion. 
The weighted average yields stood at 8.18 percent for the three-month bill (up by 5bps), 8.25 percent for the six-month bill (up by 2bps) and unchanged at 8.49 percent for the 12-month bill.
On the external front, the Sri Lankan rupee depreciated against the US dollar, standing at Rs.328.20/US dollar, compared to Rs.326.92/US dollar seen previously. 
The overnight liquidity in the banking system contracted to Rs.168.33 billion, from Rs.181.68 billion recorded previously.