Key Highlights
- Medium-term government bond yields (3Y–9Y) rose 25–35 basis points week-on-week, while short-term yields (under 1Y) eased 5–10 basis points
- Treasury bill yields fell across all three tenors at the latest auction, down 8–17 basis points
- Public Debt Management Office announced a new LKR 150 billion bond auction for 11 September
- The rupee held broadly steady against the US dollar, easing marginally to 328.21
- Banking system liquidity edged up slightly to LKR 363.31 billion
Stock Market Summary
No equity market data was available in today’s report. Coverage will resume once figures are released.
Fixed Income Summary
Secondary market bond trading was largely range-bound during the session, with transactions spanning maturities from 2028 through 2034. Compared to a week earlier, yields on bonds in the three-to-nine-year segment climbed notably, rising as much as 35 basis points in the five- and seven-year tenors. Shorter-dated bonds moved in the opposite direction, easing modestly. At the primary market level, Treasury bill yields fell across all tenors at the latest auction — the 91-day settled at 8.96%, the 184-day at 9.27%, and the 364-day at 9.81%. The PDMO also confirmed a fresh LKR 150 billion bond auction for 11 September across the 2030, 2034 and 2037 maturities, adding to near-term supply.
Currency Market Update
The rupee traded at 328.21 against the US dollar, a marginal appreciation from 328.34 in the previous session. The move was modest and within recent ranges, with no material shift in currency market conditions.
Business Impact
The divergence between falling short-term T-bill yields and rising medium-term bond yields is the most notable signal for businesses today. Short-term borrowing costs and money market returns are trending lower, while medium-term financing referenced against the 3–9 year curve is becoming more expensive. The upcoming LKR 150 billion bond auction will be an important gauge of whether current yield levels hold or move further. Currency and liquidity conditions remained stable and are not expected to be a near-term driver of business costs.
What to Watch Next
- Results of the 11 September T-bond auction (LKR 150Bn, 2030/2034/2037 tranches)
- Whether the yield divergence between short and medium tenors persists or narrows
- Equity market data, pending availability, to complete the cross-market picture
Source Attribution
Source: Colombo Stock Exchange market data, Central Bank of Sri Lanka statistics and publicly available market information.