Breaking Down The Bond Turnover In The Domestic Secondary Market

Bond turnover in the domestic secondary market extended the previous’ weeks slide by 25.5% to KES 15.59bn, from KES 20.91bn recorded the previous week.

In the primary bond market, the fiscal agent is offering KES 35.0bn via two fixed coupon bonds, FXD1/2024/03 and FXD1/2023/05. The bonds’ period of sale runs up to 10th January 2024.

The inversion of the yield curve persists with short-term interest rates remaining higher than long-term rates on government securities.

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There is also a slight inversion on the short end given that the yield on the 182-day paper surpassed that of the 364-day.

The scenario implies a declining confidence in the long-term economic outlook or liquidity conditions. Consequently, investors are positioning themselves within short-term securities, consistently favoring shorter-term instruments even along the short end of the yield curve.

In the foreign exchange market, the shilling ceded an additional shilling and 35 cents against the dollar, marking the second most substantial fall in a week since the year began.

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This is despite the recent CBR hike which temporarily mitigated the pace of shilling depreciation in the previous two weeks.

The shilling also lost against all the other relevant currencies. YTD, the currency has weakened the most against the GBP and the least against the JPY.