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Bond Market look forward to policy meeting

Weekly Yield Movement & Volume

During the first three days of the week (19-12-2019 to 23-12-2019), the secondary market yield curve remained broadly unchanged while overall market witnessed limited activities amidst thin volumes.  On Tuesday, the yield curve experienced a downward shift mainly in the short to mid tenor maturities with renewed buying interest from local counterparties mainly centred on 2024 maturities. Furthermore, CBSL’s final  monetary   policy  announcement  for 2019 will be held on 27th December, Friday.

At the weekly Treasury bill auction, weighted average yields for both 3M and 1Yr bill remained at same levels while the yield for 6M bill dipped by 5bps to 8.02%.
Meanwhile in the forex market, the rupee appreciated to close the week at LKR 181.23 from LKR 181.31 held at the beginning of the week.

Liquidity & CBSL Holdings

Volatility  in  liquidity  was  witnessed  although  it remained positive during the week. The highest excess liquidity for the week was recorded on 19th December amounting to LKR 37.99B, although witnessed a slight decline towards the end of the week to LKR 26.07B. Meanwhile, CBSL holdings slightly decreased to close at LKR 74.74B.

Foreign Interest

Foreign holding in Government Securities decreased by LKR 4.5B to record at LKR 103.9B while foreign holding percentage also declined below 2.0%.

Maturities for next week

The Government  Security  market  has  to  settle a Treasury bill maturity amounting to LKR 23.5B and a  coupon  payment  amounting  to  LKR  39.0.8B during the week ending 3rd Jan 2020.