Buying appetite dominates for second continuous day

By First Capital Research

The secondary market yield curve slightly adjusted downwards on the belly, as buying interest continued to dominate the market during the day. 

Despite slight selling interest that hovered in the market, buying appetite remained strong, led by moderate participation as buyers accepted at the quoted offer rates. 

Accordingly, bullish momentum rose predominantly on the 2028 tenor with 15.02.2028, 01.05.2028 and 01.07.2028 closing trades at 11.75%, 11.83% and 11.85%, respectively. 

Meanwhile, 15.12.2027 enticed transactions at 11.70% levels. Moreover, on the mid end of the curve 15.09.2029 traded at 12.05% and 15.05.2030traded at 12.10% while, on the long end, 01.12.2031 enticed business at 12.40%. 

Meanwhile, investors await the outcome of the weekly auction scheduled for tomorrow following the decline in weighted average yield rates during the previous week. 

Accordingly, CBSL expects to raise Rs. 110.0bn from the auction today, with LKR 30.0Bn being raised from both 91days and 182days maturities while Rs. 50.0bn is being raised from the 364days maturity. 

On the external side, LKR continued to see appreciation against the greenback, closing at Rs. 301.5. 
Meanwhile, overnight liquidity declined sharply yesterday, registering at Rs. 42.7bn compared to yesterday’s closing of Rs. 122.4bn while CBSL holdings remained stagnant at Rs. 2,595.6bn.