June 16, 2022/Coronation Research
Summary
- Opening market liquidity was reported at N237.5bn on Friday (10 June ‘22). Overnight and repo rates closed within a range of 13 – 14%. The average NTB yield increased by +16bps w/w to close at 4.1%. At the latest primary market NTB auction held last week Wednesday, the CBN offered N174.3bn but allotted N182.6bn worth of NTBs to market participants, stop rates remained unchanged in one out of the three tenors 91-day: 2.5%, 182-day: 3.84% (previously 3.89%), 364-day: 6.44% (previously 6.49%). Meanwhile, the average yield for OMO bills increased by +3bps w/w to close at 4.4%.
- As for the secondary market for FGN bonds, the average yield declined by -3bps w/w to close at 11.1%.
- At the Eurobond market, yields increased for all sovereigns under our coverage. For the sovereigns, the average yield increased by +135bps w/w to 12.9%. This uptick can be partly attributed to recent monetary policy tightening in advanced economies.
- Notably, the U.S Fed raised its key policy rate by 75bps to 1.5% – 1.75% at its June meeting and left the door open for further rate hikes in subsequent meetings to combat rising inflation. According to the US Bureau of Labor Statistics, headline inflation in the US increased to 8.6% y/y in May ‘22 vs 8.3% y/y recorded in April ’22. Inflationary pressure was significant in the prices of gasoline (48.7% y/y), energy (34.6% y/y), fuel oil (106.7% y/y), electricity (12% y/y), natural gas (30.2% y/y), food (10.0% y/y), used cars and trucks (16.1% y/y ) and airline fares (37.8% y/y).
For the full Coronation fixed income and exchange rate (CFEX) update, please click here.
