Bond Market Recovers Late Week Amid Volatile Yields 📈

• Secondary Bond Market: Yields moved in an inverted U-shape, spiking early due to oil prices and geopolitical tension before recovering late-week on softer Brent crude and lower US Treasury yields. However, two-way quotes closed higher overall W-o-W. Key maturities traded as follows: • 15.09.29: 10.70% → 11.10% high → 10.90% close • 01.08.30: 10.90% → 11.45% high → 11.25% close • 15.10.30: 11.10% → 11.50% high → 11.30% close • 01.02.31: High of 11.65% → 11.30% close • 15.12.32: 11.70% → 11.90% high → 11.60% close • 01.11.33: 11.85% → 12.00% high → 11.82% close • 15.09.34: 12.00% → 12.20% high → 12.05% close • Treasury Bill Auction: Reversing an 11-week downward trend, yields increased across all tenors at the PDMO auction, which successfully raised the targeted Rs. 70 Bn (bids at 2.45x offer): • 91-Day: 9.18% (+15 bps) • 182-Day: 9.36% (+12 bps) • 364-Day: 9.88% (+11 bps) • Foreign Outflows: Foreign holdings in Rupee Treasuries fell by Rs. 7.30 Bn to Rs. 206.10 Bn, breaking a 14-week streak of net inflows. • Liquidity & Currency: Interbank liquidity surplus remained elevated at Rs. 359.79 Bn (vs. Rs. 366.11 Bn prior). Call Money and Repo rates averaged 8.91% and 8.96%. The Sri Lankan Rupee depreciated against the USD to close at Rs. 330.75/331.25 (vs. Rs. 328.60/328.70 prior), with average daily spot volumes at US$ 48.45 Mn.