Primary and secondary market yields move in opposite directions during week

Tuesday, 5 May 2015 01:54 - - {{hitsCtrl.values.hits}}

Parallel shift upwards of the yield curve witnessed during the week By Wealth Trust Securities The bond market witnessed mixed fortunes during the week ending 30 April, with primary market yields dipping during the week while secondary market yields increased week on week, reflecting a parallel shift upwards on the overall yield curve for the first time in three weeks. The liquid maturities of 01.06.18, 15.09.19, 01.08.21, 01.07.22, 01.09.23, 01.01.2024 and 15.03.25 was seen hitting weekly highs of 8.02%, 9.22%, 8.50%, 8.55%, 8.85% and 9.10% respectively against its last week’s closing levels of 7.67/72, 8.03/06, 8.30/36, 8.32/40, 8.55/60 and 8.90/00. This was despite weighted averages at the weekly bill auction decreasing for a third consecutive week and weighted averages on the Treasury bond auctions decreasing considerably against their respective previous weighted averages as well.

Furthermore, the first leg of the $ 1.5 billion currency swap between the two Central Banks of Sri Lanka and India took effect as well during the week while Inflation for the month of April saw its point to point number remain unchanged at 0.1% while its annualised average decreased to 2.1% in comparison to March. Interestingly, the week closed with the news of a further Rs. 10 billion been offered in total through two Treasury bond auction due today (5 May) for Rs. 5 billion each on a 2.09 year maturity of 01.02.2018 and a 5.0 year maturity of 15.05.2020. In money markets, the average surplus liquidity for the week ending 30 April remained high at Rs. 125.04 billion which in turn saw overnight call money and repo rates decrease further to average 6.12% and 5.96% respectively for the week against its previous week’s averages of 6.16% and 6.02%.

Rupee depreciates during the week Meanwhile in Forex markets, active one month forward contracts was seen closing the week lower at Rs. 134.80/00 while spot contracts dipped to Rs. 133.10/30 as well on the back of importer demand. The daily average USD/LKR traded volume for the first three trading days of the week stood at $ 62.55 million. Some of the forward dollar rates that prevailed in the market were 3 months – 135.55 and 6 months – 137.60.