Bearish Sentiment Persists in Secondary Bond Market Ahead of Rs. 140 Bn T-Bill Auction 📈

• Market Overview: The secondary bond market remained under pressure with yields edging higher across the curve due to persistent selling interest, cautious investor participation, and rising global crude oil prices. • Bond Yield Movements: Selective trades saw the 01.07.28 maturity trade at 11.50%, the 15.12.29 at 12.00%, and the 01.03.30 at 12.10%. Longer-term 15.06.34 maturity yields pushed up to a range of 13.12%–13.13%. • Upcoming Treasury Bill Auction: A Rs. 140.00 Bn T-Bill auction is scheduled today (Rs. 65.00 Bn for 91-day, Rs. 55.00 Bn for 182-day, and Rs. 20.00 Bn for 364-day tenors). This total is below the estimated maturing volume of Rs. 168.80 Bn. • Previous Auction Recap: Last week’s auction was undersubscribed, raising only 68.26% (Rs. 95.56 Bn) of its target. Driven by a recent 100-basis point Monetary Policy rate hike, weighted averages spiked to their highest levels in 79 weeks: 91-day at 9.36% (+118 bps), 182-day at 9.68% (+143 bps), and 364-day at 9.83% (+134 bps). • Money Market Liquidity: The weighted average call money rate held above 9% for a fourth day at 9.14%, while the REPO rate stood at 9.19%. Market net liquidity surplus was recorded at Rs. 93.56 Bn, with CBSL draining Rs. 40.00 Bn via an overnight repo auction at 8.75%. • Forex Market: The USD/LKR spot contracts depreciated slightly to close at Rs. 332.50/333.50 against the previous day's Rs. 331.50/332.50. Total traded volume stood at US$ 70.93 Mn.