📈 Bond Yields Volatile Amid T-Bill Auction & Global Headwinds

• Market Drivers: Early gains driven by Fitch's upgrade of Sri Lanka's sovereign rating to 'B-' (Stable Outlook) and favorable IMF assessments were erased following higher T-Bill yields, Middle East tensions, and rising global bond yields. • Treasury Bills: Yields increased across the board for a 2nd straight week. • 91-day: 9.20% (+2 bps) • 182-day: 9.37% (+1 bp) • 364-day: 9.93% (+5 bps) • The PDMO raised the full Rs. 60 Bn offered (total bids 2.41x offered), plus Rs. 6 Bn in phase two. • Bond Curve Dynamics: Short-tenor quotes closed lower week-on-week, while longer tenors retraced to previous levels. The 2030 and 2031 tenors recorded a distinct V-shaped trajectory (e.g., 01.08.30 fell from 11.30% to 10.95% before closing at 11.15%). • Liquidity & Forex: • Money market liquidity surplus expanded to Rs. 370.92 Bn (up from Rs. 359.79 Bn). • Call Money and Repo rates edged up to 8.96% and 9.00%. • Foreign holdings in rupee Treasuries dropped by 4.50% WoW (net outflow of Rs. 9.17 Bn) to Rs. 196.93 Bn. • Rupee appreciated: USD/LKR closed stronger at Rs. 330.40/330.50 (vs. Rs. 330.75/331.25 prior week), averaging $ 69.85 Mn in daily trading volume.