Bill yields climb for a sixth week, industry holds up and the reservoirs lag the season
The government is paying a little more each week to borrow for three months: the yield at auction has risen six weeks running, to 9.30%. Industry is holding up, with output in August 1.3% above a year earlier, and the major reservoirs, at 37.8% full, are behind their usual level as the Maha season starts.
By MacroLab AI · 16 Oct 2026
Reviewed by Kasun Herath, 17 Oct 2026
On this page
Six weeks of dearer short-term moneyIndustry is holding upThe reservoirs lag the seasonOil and tourismThe week in numbersComing upThe dataThe three-month bill yield has risen for six weeks
Treasury bill auctions: weighted average yield before tax, % a year, weekly.
Six weeks of dearer short-term money
The rise has been small each week but steady. The three-month bill fetched 8.96% at the start of September and 9.30% at Wednesday's auction, now above the top of the Central Bank's corridor for overnight money, which runs from 8.25% to 9.25%. Longer bills held still, at 9.44% for six months and 9.95% for a year.
What stood out at the auction was how little six-month money the government took. Of the Rs 30,000 million on offer it accepted only Rs 8,453 million, and it leaned on one-year bills instead: Rs 17,481 million, up from Rs 6,380 million a week earlier. A second round added Rs 7,206 million.
Bonds moved the same way. Dealers' quotes in the Public Debt Management Office's daily report put the average yield on Treasury bonds with eight to ten years left to run at 12.12% on 16 October, against 12.00% on 9 October and 11.19% twelve months ago. The whole curve, day by day, is on the yield curve page. Banks' prime lending rate, which rose for four weeks alongside the bill yields, dipped this week.
Industry is holding up
The Department of Census and Statistics' index of industrial production stood at 99.7 in August, according to the Central Bank's Weekly Economic Indicators of 16 October. That is 1.3% above August 2025, whose index now stands at 98.4, and a faster rise than July's 0.2%. Food products did most of the lifting, up 8.5% on a year earlier, along with coke and refined petroleum products, up 10.0%. Wearing apparel, the biggest export industry, fell 10.6% and chemicals 17.3%.
Food and refined fuel lifted industry in August; apparel and chemicals fell
Index of Industrial Production, compiled by the Department of Census and Statistics: % change on a year earlier, August 2026, by industry, as printed in the Central Bank's Weekly Economic Indicators.
The Central Bank's purchasing managers' surveys for September came out on 15 October. The indices are not seasonally adjusted, so a month is best compared with the same month in earlier years. The services index fell to 60.5 from 65.6, as it does every September. It was above the 58.7 of September 2025, so services grew faster this September than they did a year earlier. The manufacturing index was 53.0, the same as in August and above the 50 that separates growth from contraction, but a little below the 55.4 of September 2025.
Services dipped in September, as they do every year; factories held steady
Purchasing managers' indices, manufacturing and services (business activity), monthly, not seasonally adjusted. A reading above the line means activity grew on the month.
The reservoirs lag the season
The Irrigation Department's major reservoirs held 37.8% of their active storage on 16 October. The long-term average for that day is 42.4%, and on the same day last year they held 45.6%. They have been filling since their low of 33.5% on 14 September 2026, as the Maha season begins. The medium reservoirs were 42.8% full. On the Mahaweli Authority's daily reservoir report, which also covers reservoirs the Ceylon Electricity Board owns, the reservoirs behind the power stations held 76% of their gross capacity, and all the reservoirs on the report together 66%.
The major reservoirs are filling, but are below their usual level for mid-October
Irrigation Department, major reservoirs: effective storage, % of active storage, daily, from the start of the cultivation year in April.
Every reservoir, day by day, is on the new reservoirs page.
Oil and tourism
The spot price of Brent crude (dated Brent, as the US Energy Information Administration reports it) was US$ 126.55 a barrel on 14 October. That is off its peak this year of US$ 138.21, reached on 7 April 2026, but twice the US$ 63.00 of mid-October last year.
September is one of the quieter months for tourism. Earnings were US$ 185.6 million, by the Central Bank's estimate, 1.5% more than in September 2025, from almost the same number of visitors (0.3% fewer). The Sri Lanka Tourism Development Authority changed how it estimates earnings in May 2026 and applied the new method from January, so the comparison with last year may not be like for like.
The week in numbers
- Three-month Treasury bill: 9.30% (previous auction 9.26%)
- Six-month Treasury bill: 9.44% (previous auction 9.44%)
- One-year Treasury bill: 9.95% (previous auction 9.95%)
- Banks' prime lending rate (AWPR), week to 16 October: 11.11% (week to 9 October 11.16%)
- Call money rate, 16 October: 8.99% (overnight policy rate 8.75%)
- Banking system liquidity, 15 October: Rs 398.07 billion (9 October: Rs 399.14 billion)
- Rupee per US dollar, spot, 16 October: Rs 331.29 (9 October: Rs 330.96; a year ago: Rs 302.97)
Coming up
Next week brings the national consumer price index for September, which the Department of Census and Statistics usually publishes around the 21st, and Wednesday's Treasury bill auction, which will show whether the climb in short-term yields runs to a seventh week. Colombo inflation for October and the Central Bank's external sector figures for September follow on 30 October. Dates for every release are on the release calendar.
The data behind this article
34 series
Every figure above is read from these 34 series when the site is built. The latest readings: