January 21, 2022/Coronation Research

Summary

• Opening market liquidity was reported at N96.4bn on Friday (14 January ‘22). Overnight and repo rates closed within a range of 14-20.0%. Last week, the average NTB yield declined by -4bp w/w to close at 4.4%. At the NTB primary market auction, the CBN offered N77.6bn but allotted N57.5bn worth of NTBs to market participants. The stop rates across all three tenors changed; 91-day: 2.5% (previously 2.4%), 182-day: 3.4% (previously 3.5%), 364-day: 5.5% (previously 4.9%). Meanwhile, the average yield for OMO bills increased by 11bps w/w to close at 5.6%. At the OMO primary market auction, the CBN offered and allotted N20bn 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 declined by -7bps w/w to close at 11.5%. The DMO has published its Q1 ’22 bond issuance calendar, which shows an expected borrowing range of N210-240bn in the first quarter of this year.
• According to the US Bureau of Labor Statistics, headline inflation in the US rose to 7.0% y/y in December ‘21 compared with 6.8% y/y recorded in November ’21. The rise in inflation can be attributed to strong consumer demand and supply chain disruptions. Inflationary pressure was significant in the prices of gasoline (49.6% y/y), used cars and trucks (37.3% y/y), energy (29.3% y/y), new vehicles (11.8% y/y), food (6.3% y/y), and shelter (4.1% y/y).
• According to China’s National Bureau of Statistics, China’s headline inflation moderated to 1.5% y/y in December ‘21 compared with 2.3% y/y recorded in November ’21. Inflationary pressure declined in food prices (1.2% y/y), transportation & communication (5.0% y/y) and housing (1.6% y/y).

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