Higher Bond market rates attract fresh positions

THE secondary Bond market began last week on a cautious and subdued note, as participants largely stayed on the sidelines ahead of the Treasury Bond auction, reflecting a wait-and-see approach.

- By WeattH Trust Securities

Following the Bond auction, yields moved higher as initial market positioning adjusted to the outcome. Post-auction, yields repriced higher as the newly issued Bonds cleared at levels above market expectations, specifically on the medium tenors offered. This prompted an initial bearish adjustment in the secondary curve as participants reassessed fair value. However, this uptick proved short-lived, with renewed and increasingly aggressive buying interest emerging quickly, effectively containing further upward pressure on yields, setting the stage for a broader recovery.

The recovery gathered momentum on Tuesday. Although yields edged higher during initial trading hours, the tone shifted decisively after the Treasury Bill auction results, which provided a supportive signal to the broader rates market. As the increase in rates at the auction expressed a notable deceleration in the pace of increases, suggesting emerging signs of yield stabilisation. As a result, buying interest resurfaced strongly on Bonds at the recently elevated yield levels, triggering a reversal in yields and reinforcing the market’s recovery.