Tuesday Apr 07, 2026
Tuesday Apr 07, 2026
Monday, 6 April 2026 04:45 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary Bond market during the holiday-shortened week last week was characterised by an initial bearish bias followed by consolidation, with overall sentiment remaining largely influenced by external developments.
The dominant drivers continued to be the evolving Middle Eastern conflict and the corresponding movements in Brent crude oil prices. The sharp surge in oil prices at the start of last week, breaching $115 per barrel, heightened concerns over imported inflation resulting in an upward shift in yields. The subsequent softening in oil prices provided some relief and supported a stabilisation in yields. However, on Thursday, the US President delivered a special address regarding the Iran War where he simultaneously said that the war was almost over, attacks would continue for an additional 2-3 weeks and intensify but that negotiations were open.
Despite these counterbalancing factors, the market lacked a clear directional trend. Conflicting geopolitical signals, including mixed commentary on the trajectory of the Middle Eastern tensions, kept investor sentiment cautious and reactive throughout the week. As a result, there was a consolidation phase following the early upward adjustment in yields.
Activity levels remained subdued, partly due to the holiday-shortened trading week, with market participants largely adopting a wait-and-see approach. While transaction volumes were supported by a few block trades, broader participation remained limited, and buying interest observed at higher yield levels was largely absorptive in nature.
Overall, secondary market two-way quotes closed the week higher across the curve, with external factors continuing to anchor market direction.
In terms of the secondary Bond market trade summary:
During the week, the 01.05.27 maturity traded within intraweek highs and lows of 8.90%–8.85%.
Moving into the 2028 tenors, the 01.05.28 maturity traded within intraweek highs and lows of 9.65%–9.55%, while the 15.10.28 maturity traded at 9.80%.
Further along the curve, the 15.06.29 maturity traded at 9.90%, while the 15.09.29 maturity traded at 9.95%. The 15.12.29 maturity traded at 9.97%.
On the medium end, the 01.03.30 maturity traded within intraweek highs and lows of 10.00%–9.99%.
Further out the curve, the 01.10.32 maturity traded at 10.70%. The 01.06.33 maturity traded within intraweek highs and lows of 11.05%–11.02%, while the 01.11.33 maturity traded within 11.05%–11.03%.
At the long end, the 15.06.34 maturity traded within intraweek highs and lows of 11.10%–11.00%, while the 15.06.35 maturity traded within intraweek highs and lows of 11.0025%–11.00%.
The weekly Treasury Bill auction conducted last Tuesday (31 March) saw weighted average yields increase across the board for the for the second consecutive week. Accordingly, the yield on the 91-day Bill rose by 16 basis points to 7.80%, the 182-day Bill increased by 14 basis points to 8.09%, while the 364-day Bill saw an uptick of 9 basis points to 8.41%.
The auction was undersubscribed at the first phase in competitive bidding, raising only Rs. 32.50 billion, or 36.11% of the total offered amount of Rs. 90 billion. The bid-to-cover ratio stood at 1.20 times.
The foreign holdings of rupee-denominated Government securities recorded a net outflow for the fifth consecutive week, amounting to a sizeable Rs. 4.98 billion and as a result, total foreign holdings dropped sharply to Rs. 143.62 billion during the week ended 31 March.
In the money market, the total outstanding liquidity surplus in the inter-bank market remained elevated but dropped to Rs. 247.36 billion as at the week ending 2 April 2026, from Rs. 288.31 billion recorded the previous week. The Domestic Operations Department (DOD) of the Central Bank of Sri Lanka continued to drain out liquidity during the week by way of overnight Repo auctions at weighted average yields ranging from 7.60% to 7.61%.
The weighted average interest rates on Call Money and Repo stood at 7.63% and 7.66%, respectively, at the close of the week ending 2 April against its previous week’s closings of 7.60% and 7.65%.
Forex market
In the Forex market, the USD/LKR rate on spot contracts was seen closing the week depreciating to Rs. 315.35/315.40 as against the previous week’s closing level of Rs. 314.70/315.00. This was subsequent to trading at a high of Rs. 315.10 and a low of Rs. 315.50.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 68.55 million.
(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, money broking companies)
