Source: http://www.ft.lk/2013/07/01/foreign-selling-in-sri-lanka-tbonds-on-the-rise.
Basically why this is happening is that the bond holders are betting that interest rates will rise. They are selling long term and going into short term because they feel that interest rate will go up (and they will be able to buy back the bonds they sold at lower prices.)
However the Central Bank is trying to bring down interest rates.
How will this scenario play out? Any ideas?
Any rise in interest rates will be bad for the stock market.