Please click to download the Fixed Income and Currency Market Report for the Week ended 12^th May 2017

MONEY MARKET 

·         Money market rates continued to trend upwards in the outgone week as CBN’s FX sales and OMO auctions (N93bn) more than offsetting the N88bn worth OMO maturities on Thursday.

·         While there is a N41bn OMO maturity in the coming week, we expect CBN to maintain its stance in squeezing system     liquidity in defence of the local currency.

BOND MARKET

·         Despite the squeeze on system liquidity, yields in the bond market fell by -2bps w/w to average 16.11%. The decrease in yields was more pronounced on short dated maturities.

·         The DMO held a bond auction during the week, selling N110bn worth of 5yr, 10yr and 10yr bonds at 16.30%, 16.29% and 16.30% stop rates respectively. 

·         The higher stop rates on the 5yr bond, against the April  auction may not be unrelated to the low subscription level on the maturity.

·         With CBN likely to maintain its FX intervention and OMO auctions, we expect yields in the bond market to remain    elevated.

FOREIGN EXCHANGE MARKET

·         Although the NGN remained relative flat at the interbank market, it  however gained +1.30% at the parallel market as CBN maintained its FX intervention sales.

·         Also, the local currency continued to open and close at N380/$ levels at the NAFEX market.

·         In the near term, we expect the NGN performance to be influenced by CBN’s intervention sales as well as expectation of improved liquidity  in the new I&E window.