August 2, 2022/Coronation Research

Summary

• Opening market liquidity was reported at N73.4bn on Friday (29 July ‘22). Overnight and repo rates closed within a range of 14 – 16%. The average NTB yield increased by +48bps w/w to close at 7.7%. At the latest primary market NTB auction held last week Wednesday, the CBN offered and allotted N264.3bn worth of NTBs to market participants. The stop rates changed in two out of the three tenors; 91-day: 2.8% (previously 2.75%), 182-day: 4.1% (previously 4.0%), 364-day: 7.0%. Meanwhile, the average yield for OMO bills increased by +68bps w/w to close at 9.6%.
• As for the secondary market for FGN bonds, the average yield increased by +9bps w/w to close at 11.9%. 
• At the Eurobond market, average yield for the sovereigns decreased by -29bps w/w to 12.8%. 
• Based on data from the Bureau of Economic Analysis (BEA), the US economy grew by 1.6% y/y in Q2 ’22, compared with 3.5% y/y in Q1 ’22. On a q/q basis, it contracted by -0.9% in Q2 ’22 compared with -1.6% in Q1 ’22.  The moderation can be partly attributed to the decline in inventories, supply chain disruptions, and fading impact of government stimulus on consumption. On another note, according to a flash estimate published by Eurostat, the Euro Area’s real GDP grew by 4% y/y in Q2 ’22, compared with 5.4% y/y in Q1 ’22. On a q/q basis, it grew by 0.7% compared with 0.5% q/q in Q1 ’22. The growth can be partly attributed to the easing of covid restrictions and boost in tourism activity on the back of  summer. However, the outlook is hazy due to the impact of natural gas cuts from Russia and continuous adverse effects of the Russia-Ukraine crisis.

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