October 11, 2021/Coronation Research

Summary

• Opening market liquidity was reported at N75.4bn on Friday (8 Oct ‘21). Overnight and repo rates closed within a range of 14.0-15.0%. Last week, we noticed that due to the lack of OMO supply as investors focused on the longer end of the NTB curve, this led to the average NTB yield decreasing by 1bps w/w to close at 5.3%. Meanwhile, the average yield for OMO bills increased by 15bps w/w to close at 6.4%.
• The secondary market for FGN bonds was bearish due to reduced market liquidity and profit-taking ahead of the MTN bookbuild. Average yield increased by 14bps w/w to close at 11.3%. On Wednesday, the DMO published its Q4 ‘21 bond issuance calendar showing a range of amount on offer of N400bn-480bn. We noted that in the prior quarter (Q3 ’21) N450bn-540bn was placed on offer.
• According to the U.S Bureau of Labour Statistics, US total non-farm payroll data increased by 194,000 in September (the lowest since January 2021) and the unemployment rate declined to 4.8%. Job gains occurred in leisure and hospitality, professional and business services, retail trade, and transportation and warehousing. Meanwhile, employment declined sharply in public education and in health care. Most back-to-school hiring typically occurs in September but hiring this September was lower than usual, resulting in a decline after seasonal adjustment, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns.

For the full Coronation fixed income and exchange rate (CFEX) update, please click here