Culled—Proshare
November 5, 2018/ Anchoria AM Research
Money Market
The money market rate decreased last week as the Overnight rate (OVN) and Open Buy Back (OBB) fell to 4.83% and 4.03% respectively. Consequently, the average money market rate fell by 6.45% to settle at 4.43% due to increased system liquidity to close at cN811bn. Inflow for the week included: OMO bills maturity of cN382bn, and FAAC payments of cN355bn while Outflow included: OMO sales of cN518bn and Wholesale, Invisible and SME FX auction of $210mn.
We expect rates to inch up on Monday as banks are expected to
fund for another round of FX sales in the Wholesale, Invisibles and SME Market. Barring multiple OMO Auctions during the week, we expect the money market rates to close little higher than the current rates.
| Instrument | 26/10/2018 | 02/11/2018 | Change |
| OBB | 10.33% | 4.03% | -6.30% |
| OVN | 11.42% | 4.83% | -6.59% |
Source: Anchoria AM Research, FMDQ OTC
Forex: USD/NGN
The CBN Official rate continued on its upward trend to close at N306.60/$, a 0.02% increment while the rate in the Investors and Exporters’ FX Window fell by 0.03%. Naira at the parallel market rose by 0.14% to close at N362.00/$ (using the Everdon BDC Rate).
In spite of constant intervention by the apex bank via its frequent Wholesale and Retail SMIS programme, we have seen a gradual and continual rise in the CBN official rate.
| 26/10/2018 | 02/11/2018 | Change | |
| CBN Official Rate | 306.55 | 306.60 | +0.02% |
| I&E FX Window | 363.84 | 363.74 | -0.03% |
| Everdon Rate | 362.00 | 362.50 | +0.14% |
Source: Anchoria AM Research, FMDQ OTC
Commodities
The Brent Crude oil and WTI Crude oil fell by 6.69% and 7.28% to close at $72.43 per barrel and $62.67 per barrel respectively. This represents four weeks of a consecutive fall in the prices of the Crude Oil futures. This is due to surging US supply and speculation that American sanctions against Iran will not succeed in reducing exports as Saudi Arabia reiterate its commit to offset the deficit from the Iran Sanction.
Fixed Income
Bond
The Bond market continued on its bearish trend last week with yields rising across most maturities traded and selloffs more pronounced on 2034 and 2030 bonds. This is due to reduced local institutional investors (Asset Managers and Pension Fund Managers) interest towards the instrument. Average yield rose by 23bps to close the week at 15.35%.
We expect the bearish trend to continue in the new week as market participants anticipate higher stop rates at auctions.
Secondary Market
Source: Anchoria AM Research, FMDQ OTC
Treasury Bills
Due to a relatively buoyant system liquidity during the week, the treasury bills market traded on a bullish note. Consequently, the average yield fell by 29bps to close the week at 13.44%. Market activities were relatively active as the value of transactions rose to N6.00 trillion from N1.02 trillion in the previous week.
We expect T-bills yield to trend higher due to anticipated reduced system liquidity via OMO and FX auctions during the week.
Primary Market Auction
Secondary Market
Source: Anchoria AM Research, FMDQ OTC
Anchoria Research: +234 908 720 6076; research@anchoriaam.com