📈 Bond Yields Volatile Amid Geopolitical Tensions & Policy Review

Secondary market bond yields experienced a "see-saw" trend yesterday, initially softening on temporary de-escalation in the Middle East before retracing higher due to renewed uncertainty and profit-taking. Market sentiment remains cautious ahead of today’s crucial Monetary Policy Review. • Market Movements: • 15.02.28 maturity traded at 9.50%. • 2029 maturities (June/Sept/Dec) saw intraday lows of 9.75%–9.85% before climbing back to 9.95%. • Long-term yields: 2032 maturity traded between 10.60%–10.85%, while 2033 maturity held at 10.90%. • Monetary Policy & Auctions: • The Central Bank of Sri Lanka (CBSL) is set to announce its 2nd Policy Review for 2026 today (7:30 AM). Rates currently sit at 7.25% (SDFR) and 8.25% (SLFR). • A Treasury Bill auction of Rs. 80 billion is scheduled for today, featuring 91-day (Rs. 20b), 182-day (Rs. 25b), and 364-day (Rs. 35b) bills. The offer is slightly below the maturing volume of Rs. 87.17 billion. • Liquidity & Forex: • Net Liquidity Surplus: Rs. 241.71 billion. • Currency: The LKR saw slight depreciation, with the spot rate closing at Rs. 314.00/314.40 against the USD, compared to the previous close of Rs. 313.00/314.00. • Daily Volume: Secondary market bond/bill transactions totaled Rs. 16.93 billion; Forex volume stood at US$ 71.25 million.