SAT 27 NOV, 2021-theGBJournal- Trading in the Treasury bonds secondary market remained tepid with low volumes traded, following a dearth in demand, as investors sought higher yields from non-sovereign sources.
As selling pressures dominated the week’s proceedings, the average yield expanded by 5bps to 11.4%. Across the benchmark curve, yields contracted at the short (-12bps) following demand for the JAN-2022 (-56bps) bond, but expanded at the mid (+19bps) and long (+4bps) as investors sold off MAR-2027 (+28bps) and MAR-2050 (+9bps) bonds, respectively.
In the short term, we expect yields to oscillate around current levels, driven by thin maturities and deliberate efforts by the DMO to reduce domestic borrowing costs for the government. Also, we expect non-bank liquidity to be geared towards relatively higher non-sovereign instruments, thus tempering demand.
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