Impala Market Trading Strategy Playbook: Uganda, Week Ending 06 June 2025

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Market Recap – What Happened Last Week?

Secondary market activity surged into June with significant volumes traded in long-dated papers like the 15.000% of 18-Jun-2043 and 14.250% of 23-Aug-2029. The 2043s dominated volume, contributing over 50% of value traded across all days, with YTMs rising to 18.25% by Friday – signaling sustained bearish sentiment on duration.

• Yield Pressure: Long-end yields continued drifting up – 2043s up ~50bps WoW from 17.75% to 18.25%.

• Mid-Curve Demand: 2032s and 2034s saw stable demand around 90.9–91.3 price handles, with occasional rallies but no breakout.

• Short-End (0% bonds): Continued high activity due to demand for cashflow recycling, especially in Q4 maturities (Oct–Dec 2025).

Yield Forecasts – Week Starting 09 June

Note: Yields above 18.00% for 2043s suggest market is still pricing in election risk, fiscal slippage, and inflation uncertainty.

Trade Recommendations

1. Ride the Mid-Curve Sweet Spot (5–9 years):

• BUY: 14.250% of 23-Aug-2029 near 96.30 or lower.

• Rationale: Moderate duration, ample liquidity, likely rally if rates stabilize.

2. Avoid Aggressively Adding to 2043s (Yet):

• HOLD/WAIT if priced below 88.75 - too many sellers, risk of further drawdown.

• Better entry may come post-July auction schedule clarity.

3. Short-Term Rotations – Tactical Gains:

• BUY 0% of 10-Oct-2025 below 96.85 – clean exit potential for investors preferring capital preservation.

Portfolio Allocation Advice

For a UGX 10 billion investor looking to optimize over the next 90–180 days:

Tilt duration exposure modestly shorter. Post-June inflation print and primary dealer auction guidance may reset curve expectations.

Is the Market Pricing In Election Risk?

Yes, rising long-end yields and persistent discounts on 2043s reflect early market hedging of:

• Spending pressure from a pre-election fiscal cycle,

• Higher T-bill issuance to fund cash needs,

• Delay in rate cuts amid food price shocks.

Watchlist: Q2 budget speech and July auction calendar.

Impala Market Trading Alpha

“If you had followed our 23-May trading playbook...”
Holding the 13-Jan-2028 (14.125%) and rotating out of 2043s would have preserved value and given 30bps in alpha.

Weekly Auction + Liquidity Signals

Expect Bank of Uganda to:

• Tap into 2Y–10Y tenors to manage rollover risk,

• Maintain heavy tap sales of 2043s,

• Possibly offer longer-term T-bills due to retail appetite.

Closing Thought

Uganda’s bond market is navigating a tricky balance: attractive real yields vs rising macro risk. Smart positioning, especially mid-curve and selectively short, offers better capital preservation and upside in an uncertain fiscal environment.

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