March 13, 2023/Coronation Research
Summary
- Opening market liquidity was reported at N197.3m on Friday (10 March ’23). Call, overnight and repo rates closed within a range of 6% – 11%, as system liquidity moderated. This week, we expect rates in the money market to trend upwards as the projected outflows from an NTB, OMO, and fx auction, as well as a potential CRR debit by the CBN would likely outweigh inflows from an fx refund, NTB maturity, and FGN coupon payment.
- The average NTB yield declined by -39bps to close at 3.6% w/w. At the latest primary market NTB auction held last week Wednesday, the CBN offered N224.5bn but allotted N324.5bn worth of NTBs to market participants. The stop rates changed across the three tenors; 91-day: 1.44% (previously 3.24%), 182-day: 6.00% (previously 3.24%), 364-day: 10.00% (previously 9.90%). Meanwhile, OMO yield remained unchanged to close at 3.0% w/w.
- As for the secondary market for FGN bonds, the average yield declined by -18bps to close at 13.1% w/w.
- In the Eurobond market, the average yield increased by +25bps to close at 12.5% w/w.
- According to China’s Bureau of Statistics, China’s inflation moderated to 1.0% y/y in February ’23 compared with 2.1% y/y recorded in January ’23. This can be partly attributed to the slowdown in the cost of food (2.6% y/y) and non-food (0.6% y/y). However, inflationary pressure was persistent in health (1.0% y/y), and clothing (0.7% y/y).
- China’s PMI increased to 52.6 in February ’23 from 50.1 recorded in January ’23 indicating a second consecutive expansion in factory activity. Overall, production activities continued to improve as companies reported increased output and purchases by customers partly due to the reopening of the economy after periods of stringent zero covid-policy.
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