April 8, 2022/Coronation Research

Summary

• Opening market liquidity was reported at N387.9bn on Friday (01 April ‘22). Overnight and repo rates closed within a range of 10-10.7%. The average NTB yield increased by 3bps w/w to close at 3.3%. At the primary market NTB auction held last week, the CBN offered N143.3bn but allotted N174.2bn worth of NTBs to market participants. This was largely due to improved system liquidity on the back of OMO maturities of N105bn, NTB maturities of N58bn, and FGN coupon payments of N185.8bn. The stop rate rose across two of the three tenors; 91-day: 1.8% (previously 1.7%), 182-day: 3.0%, 364-day: 4.5% (previously 4.0%). 
• Meanwhile, the average yield for OMO bills remained unchanged w/w to close at 3.6%. At the primary market OMO auction held last week, the CBN allotted N50.0bn worth of OMO bills across all three tenors and the stop rates remained unchanged from the previous auction (89-day: 7.0%, 173-day: 8.5%, 348-day: 10.1%).
• As for the secondary market for FGN bonds, the average yield increased by 1bp w/w to close at 10.7%. 
• According to the US Department of Labour, the US nonfarm payroll increased by 431,000 in March ‘22 compared with 678,000 recorded in February ‘22. The unemployment rate declined to 3.6% from 3.8% in the previous month. Employment growth continued in leisure and hospitality, professional and business services, retail trade and manufacturing.
• Based on data from China’s National Bureau of Statistics, the Manufacturing PMI declined to 49.5 in March ’22 from 50.2 recorded in February. The Services PMI declined to 46.7 in March ‘22 compared with the 50.5 recorded in the previous month. Overall, the Composite PMI declined to 48.8 in March ’22 from 51.2 recorded in February. This can be partly attributed to the COVID-19 resurgence and the trickledown effect from the Russia-Ukraine crisis.