Bond prices tumble during the week on political uncertainties

Monday, 12 January 2015 00:15 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities Considerable selling interest across the yield curve saw secondary market bond yields increase (bond prices dip as yields increase) throughout the week ending 09th January, reflecting a parallel shift upwards of the overall yield curve. The liquid

two 2018 maturities (i.e. 01.04.2018 & 15.08.2018) were seen increasing to highs of 7.50% and 7.65% respectively against its weeks lows of 7.10% and 7.15% while the 01st July 2019 and 01st July 2022 maturities were seen increasing to highs of 7.80% and 8.26% respectively against its weeks lows of 7.25% and 7.80%. In addition, illiquid durations on the 2019’s were seen changing hands within the range of 7.80% to 8.00% as well. However, two way quotes were seen widening towards the latter part of the week due to the uncertainties. Furthermore, selling interest in secondary market bills was evident as well during the week. In money markets, overnight call money and repo rates decreased to average 6.08% and 5.45% respectively for the week, as average surplus liquidity increased to Rs. 36.91 billion against its previous week’s average of Rs.26.61 billion. An amount of Rs. 33.18 billion was drained out on Friday by way of a seven day repo auction at a weighted average of 5.98%. Rupee dips further during the week The rupee on spot next and spot next-next contracts was seen losing ground during the week to close the week ending 09th January at Rs 132.70/90 and Rs.132.80/00 respectively on the back of importer demand as market participants were seen refraining from trading on spot contracts . The daily USD/LKR average traded volume for the first three days of the week stood at US $ 51.73 million. Some of the forward dollar rates that prevailed in the market were 1 Month - 133.32; 3 Months - 134.35 and 6 Months - 135.55.

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