December 5, 2022/Coronation Research
Summary
- Opening market liquidity was reported at N203.7bn on Friday (02 December ‘22). Call, overnight and repo rates closed within a range of 9% – 14%. This week, we expect rates in the money market to remain elevated as the projected outflow from OMO, NTB and fx auctions as well as a possible CRR debit by the CBN, would likely outweigh potential inflow from a potential fx refund and OMO maturity.
- The average NTB yield increased by +32bps to close at 10.9%. Meanwhile, the average OMO yield declined by -2bps w/w to close at 10.1%.
- As for the secondary market for FGN bonds, the average yield declined by -11bps to close at 14.3% w/w. At the Eurobond market, the average yield declined by -9bps to close at 11.6% w/w.
- According to Eurostat, Eurozone inflation slowed to 10% y/y in November ’22 compared with 10.6% y/y recorded in October ’22. This is the first moderation in the headline inflation since June ’21. The ECB’s inflation target is 2%. Commodity prices are still high – mainly on the back of supply-side shocks triggered by the ongoing Russia-Ukraine crisis and tight labor markets in some countries.
- Eurozone Manufacturing PMI declined to 47.1 in November ‘22 from 46.4 recorded in October ’22. This marks the fifth consecutive decline in factory activity. Business confidence declined to its lowest level since May ‘20, as firms reduced purchasing activity due to concerns around the impact of rising inflation on consumer demand and firms’ costs.
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