Yield curve dips from belly end

By First Capital Research
The Central Bank conducted its weekly T-bill auction yesterday, accepting Rs.95.6 billion from the total offered amount of Rs.115.0 billion. 
The weighted average yield rates for the three-month and six-month T-bills experienced an uptick of 3bps and 2bps, respectively and stood at 7.62 percent and 7.98 percent, whilst the weighted average yield rate for the 12-month T-bill experienced a 2bps decrease compared to the previous auction. 
The Central Bank accepted Rs.16.3 billion from the three-month T-bill (offered Rs.30.0 billion) and Rs.52.2 billion and Rs.27.1 billion from the six-month and 12-month T-bills, respectively, from the offered amounts of Rs.60.0 billion and Rs.25.0 billion.
Meanwhile, the secondary market yield curve experienced mixed trading activity with the yield curve slightly coming down from the belly end of the curve. Amongst the traded maturities, at the short end, the 01.05.2027 and 15.09.2027 maturities traded at the rates of 9.50 percent and 9.65 percent, respectively. 
Whilst the 2028 maturities, 15.02.2028, 15.03.2028, 01.05.2028, 01.07.2028, 01.09.2028 and 15.10.2028 maturities traded at the rates of 9.98 percent, 10.00 percent, 10.07 percent, 10.11 percent, 10.20 percent and 10.23 percent, respectively and the 15.09.2029, 15.12.2029 and 15.03.2031 maturities traded at the rates of 10.55 percent, 10.60 percent and 11.00 percent, respectively. 
In the forex market, the Sri Lankan rupee appears to have marginally weakened against the greenback, closing at Rs.299.7/US dollar, compared to the previous day’s rate of Rs.299.2/US dollar. Meanwhile, overnight liquidity in the banking system registered an uptick, standing at Rs.94.7 billion, from Rs.83.2 billion in the prior session.