December 15, 2021/Coronation Research

Summary

• Opening market liquidity was reported at N241.2bn on Friday (10 December ‘21). Overnight and repo rates closed within a range of 15.0-17.8%. Last week, the average NTB yield declined by -2bps w/w to close at 4.5%. This is due to the moderation in stop rates (182-day: -5bps and 364-day: -55bps) at last week’s primary market auction. At the primary market NTB auction, the CBN offered and allotted N53.7bn worth of NTBs to market participants. The stop rates across two of the three tenors declined; 91-day: 2.5%, 182-day: 3.4% (previously 3.5%), 364-day: 5.3% (previously 5.8%). 
• Meanwhile, the average yield for OMO bills remained unchanged w/w to close at 5.5%. At Thursday’s primary market OMO auction, the CBN allotted N30.0bn worth of OMO bills across all three tenors and the stop rates remained unchanged from the previous auction (103-day: 7.0%, 180-day: 8.5%, 348-day: 10.1%).
• As for the secondary market for FGN bonds, the average yield rose by 15bps w/w to close at 11.6%.
• According to the US Bureau of Labor Statistics, headline inflation in the US rose by 6.8% y/y in November ‘21 compared with 6.2% y/y recorded in October ’21. Inflationary pressure was significant in the prices of gasoline (58.1% y/y), new vehicles (11.1% y/y), food (6.1% y/y) and shelter (3.8% y/y).
• According to China’s National Bureau of Statistics, China’s headline inflation rose by 2.3% y/y in November ‘21 compared with 1.5% y/y recorded in October ’21. Inflationary pressure was significant in transportation & communication (7.6% y/y) and recreation (3.0% y/y).