The sharp increase in the Treasury Bond and Bill primary market yields saw sentiment turn negative in the secondary bond market during the week ending July 1, 2022 in addition to the prevailing uncertainties in the economy.
The primary auctions during the week saw the weighted averages on the 01.06.2025, 15.01.2028 and 15.05.2031 Treasury bonds increase to 23.77%, 21.18% and 20.74% respectively while the Treasury Bill averages spiked as well to 23.85%, 24.40% and 23.84% on the 91, 182 and 364 day maturities. The outcome of the auctions led to a steep inversion of the yield curve once again.
The limited activity in the secondary bond market centered on the liquid maturities of 01.06.25 and 15.01.28 as its yields were seen increasing to weekly highs of 24.40% and 22.10% against its previous weeks closing levels of 21.25/35 and 20.50/20 while the latest 6 month and 1 year bill changed hands at highs of 25.00% to 25.02% in the secondary bill market.
The Colombo Consumer Price Index (CCPI; Base 2013=100) for the month of June galloped to a new high of 54.6% on its point to point while its annual average increased to 18.40% as well.
In money markets, the total outstanding liquidity deficit was registered at Rs.648.34 billion by the end of the week against its previous weeks of Rs. 619.20 billion while the CBSL’s holding of Govt. Securities stood at Rs. 2,111.44 billion against its previous weeks of Rs. 2,086.32 billion.
(References: Central Bank of Sri Lanka, Bloomberg E-Bond trading platform, Money broking companies)
Courtesy: Wealth Trust Securities Ltd
– Sunday Observer Sri Lanka
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