Secondary Bond Yields See-Saw Amid Geopolitical Tension 📈

The Sri Lankan financial market experienced a volatile start to the week as the secondary bond market and forex market reacted to escalating Middle East tensions. Despite an initial spike in yields, late-session buying interest led to a partial recovery. • Bond Market Performance Yields fluctuated sharply before closing higher day-on-day. Key trades included: Short-term: 2026 maturity at 8.30%; 2028 maturity at 9.00%. Medium to Long-term: 2029 maturities traded between 9.45% - 9.63%, while 2035 bonds reached 10.74%. Healthy transaction volumes were recorded as investors adjusted to global developments. • Upcoming T-Bill Auction A total of Rs. 120 Bn in Treasury Bills is on offer today: 91-day: Rs. 15 Bn 182-day: Rs. 70 Bn 364-day: Rs. 35 Bn The total offer is slightly below the maturing volume of approximately Rs. 125.95 Bn. • Currency & Liquidity Rupee Depreciation: The USD/LKR spot rate closed weaker at Rs. 310.10/310.30, compared to the previous close of Rs. 309.29/309.32, triggered by regional uncertainty. Market Liquidity: Remained high with a net surplus of Rs. 332.49 Bn. The Central Bank drained Rs. 75 Bn via overnight repo at 7.60%. • Context This volatility follows six consecutive weeks of declining yields in the primary market. Last week’s auction saw rates for 91-day, 182-day, and 364-day bills ease to 7.63%, 7.92%, and 8.24% respectively. _Note: Based on provisional market data from Wealth Trust Securities._