Momentum in secondary bond market remains positive

Monday, 22 April 2019 00:00 -     - {{hitsCtrl.values.hits}}


  • Foreign selling continues for a third consecutive week  
  • Money market liquidity improves significantly


By Wealth Trust Securities

The downward trend in the weekly Treasury bill weighted averages coupled with renewed buying interest saw the secondary bond market continue its bull run during the shortened trading week ending 18 April. 

Buying interest across the yield curve, consisting of the maturities of 01.08.21, 15.03.22, 15.03.24, 15.01.27 and 01.05.29 saw its yields dip to intraweek lows of 10.17%, 10.35%, 10.70%, 10.98% and 11.09% respectively against its weeks opening highs of 10.50%, 10.55%, 10.85%, 11.10% and 11.20%. 

In addition, the latest 364-day bill was seen changing hands at a low of 9.73% following its auction. The foreign holding in rupee bonds recorded its third consecutive week of outflows to the tune of Rs. 6.55 billion for the week ending 17 April. 

The daily secondary market Treasury bond/bill transacted volume for the first two days of the week averaged Rs. 8.56 billion. 

In money markets, the overall liquidity position in the system was seen improving significantly as the net deficit dropped to Rs. 34.71 billion during the week against its previous week net deficit of Rs. 69.58 billion.  

The overnight call money and repo rates averaged 8.54% and 8.60% respectively for the week as the Open Market Operations (OMO) Department of Central Bank continued to inject liquidity during the week on an overnight basis at weighted average yields ranging from 8.50% to 8.53%. In addition, it injected funds by way of seven to 13-day reverse repo auctions at weighted average yields ranging from 8.50% to 8.59% as well. 

 Rupee appreciates   

 In the Forex market, the rupee on its spot contracts were seen appreciating during the week to close the week at Rs. 174.05/25 against its previous weeks closing level of Rs. 174.55/65, subsequent to trading within the range of Rs. 174.10 to Rs. 174.75. 

The daily USD/LKR average traded volume for the first two days of the week stood at $ 90.43 million. 

Some of the forward dollar rates that prevailed in the market were 1 Month – 175.00/20; 3 Months – 176.90/20 and 6 Months – 179.80/20.

The secondary market yields for the most frequently traded maturities are as follows.