March 7, 2023/Coronation Research

Summary

• Opening market liquidity was reported at N985m on Friday (03 March ’23). Call, overnight and repo rates closed within a range of 6% – 13%, as system liquidity tightened on the back of outflows from an fx auction and CRR debits by the CBN. This week, we expect rates in the money market to remain elevated as the projected outflows from an NTB and fx auction, as well as a potential CRR debit by the CBN would likely outweigh inflows from an NTB maturity.
• The average NTB yield increased by +4bps to close at 4.0% w/w. Meanwhile, OMO yield declined by -75bps to close at 3.0% w/w.
• As for the secondary market for FGN bonds, the average yield increased by +11bps to close at 13.3% w/w.
• In the Eurobond market, the average yield increased by +23bps to close at 12.3% w/w. 
• According to Eurostat, Eurozone inflation moderated to 8.5% y/y in February ’23 compared with 8.6% y/y recorded in January ’23. This is the fourth consecutive moderation in the headline inflation reading. The moderation was evident in energy (13.7% y/y vs 18.9% y/y). Meanwhile, inflationary pressure was persistent in food (15.0% y/y), non-energy industrial goods (6.8% y/y), and services (4.8% y/y).
• Eurozone Manufacturing PMI declined marginally to 48.5 in February ’23 from 48.8 recorded in January ’23. Services PMI increased to 52.7 in February ’23 from 50.8 recorded in January ’23. Overall, the composite PMI increased to 52.0 in February ’23 from 50.3 recorded January ’23. Business confidence continues to rebound as firm’s purchasing activity increased on the back of moderation in input-cost inflation.

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