Tuesday Jul 28, 2026
Tuesday Jul 28, 2026
Monday, 27 July 2026 06:12 - - {{hitsCtrl.values.hits}}
By Wealth Trust Securities
The secondary Bond market opened the week on a cautious footing, with participants maintaining a defensive bias ahead of the Monetary Policy announcement along with US–Iran hostilities and increased risks to key energy supply routes reinforcing the risk-off tone.
Selling pressure drove yields higher on selected maturities while absorbent block buying interest emerged intermittently at the elevated levels, helping cushion the upward adjustment in yields—a pattern that persisted throughout the week.
By mid-week, the widely anticipated no-change Monetary Policy decision ultimately drew little market reaction. However, a clear divergence had emerged across the curve. Improving system liquidity and easing money market rates supported a compression in Treasury bill yields, while selected longer-dated bond yields continued to edge higher, resulting in a steepening of the yield curve.
Overall activity remained subdued; however, transaction volumes were supported by the execution of several sizeable block trades.
In terms of traders, on the very short end of the curve, the 01.08.26 maturity traded at the rate of 9.80% and the 15.12.26 traded within the range of 10.00%–10.16%. The 01.05.27 changed hands at the rate of 10.30%, while the 15.09.27 traded within the range of 10.36%–10.40%.
In the 2028 space, the 01.07.28 and 15.10.28 maturities traded within the ranges of 10.75%–10.70% and 10.7650%–10.73% respectively, while the 15.12.28 changed hands at the rate of 10.80%.
Moving into the 2029 segment, the 15.06.29 changed hands at the rate of 11.10%. The 15.09.29 traded within the range of 11.15%–11.25%, while the 15.10.29 and 15.12.29 changed hands at the rate of 11.25% each.
In the 2030 space, the 01.07.30 and 15.10.30 traded within the ranges of 11.53%–11.55% and 11.60%–11.65% respectively.
Further along the curve, the 15.03.31 changed hands at the rate of 11.95%, while the 01.12.31 and 01.10.32 traded within the ranges of 12.00%-11.95% and 12.00%–12.05% respectively. The 15.12.32 and 15.01.33 changed hands at the rate of 12.00% each, while the 01.11.33 traded up the range of 12.20%–12.25%. The 15.06.34 changed hands at the rate of 12.25%.
At the weekly Treasury Bill auction held last Wednesday, the weighted average yields on the 3 months and 6 months tenors dropped for the second consecutive week. Accordingly, the yield on the 91-day tenor declined by 18 basis points to 9.95% and the 182-day maturity dropped by 3 basis points to 10.24%. However, the 364-day maturity held steady at 10.20%. Incidentally the 91-Day Weighted Average Yield fell below 10% for the first time in 7 weeks.
The auction successfully raised the full Rs. 140 billion offered at the first phase of competitive bidding. A further Rs. 14 billion was raised at phase II, out of the total market subscription of Rs. 84.81 billion. Accordingly, the aggregate accepted amount of the issuance was Rs. 154 billion.
Furthermore, foreign portfolio investments in rupee-denominated government securities recorded a strong weekly inflow of Rs. 5.83 billion for the week ending 23 July and continued its steady upward trajectory. This lifted the foreign holdings to a three-year high of Rs. 182.39 billion—the highest level since July 2023—and marked the seventh consecutive week of net inflows.
In the money market, the total outstanding liquidity surplus stood at Rs. 163.07 billion at the end of the week, as against its previous week’s Rs. 167.97 billion. The weighted average interest rates on Call Money and Repo were recorded at 9% and 9.02% respectively at the close of the week.
Forex market
In the forex market, the USD/LKR rate on spot contracts closed the week broadly steady at Rs. 336.25/336.35 as against its previous week’s closing of Rs. 336.15/336.30. Intraweek, the rupee strengthened to a high of Rs. 336.05 and a low of Rs. 336.80.
The daily USD/LKR average traded volume for the first four trading days of the week stood at $ 114.73 million.
(References: Public Debt Management Office - Ministry of Finance, Central Bank of Sri Lanka, Bloomberg E-Bond Trading Platform, Money Broking Companies)
