September 4, 2023/Coronation Research

Summary

• Opening market liquidity was reported at N354bn on Friday (01 September ‘23). Call, overnight, and repo rates closed within a range of 1% – 9% as rates in the money market moderated. 
• The average NTB yield decreased by -63bps to close at 7.6% w/w. Meanwhile, the average yield for OMO bills increased by +218bps w/w to close at 13.4%.
• As for the secondary market for FGN bonds, the average yield decreased by -4bps to close at 14.1% w/w.
• In the Eurobond market, the average yield increased by +12bps to close at 11.1% w/w.
• Last week, oil prices increased partly due to expectations of further production cuts by OPEC+ and improved oil demand on the back of the depreciation of the USD relative to other currencies. As at end-August, Brent crude price increased by 3.1% to close at USD88.6/b. Bonny light and WTI also increased by 10.9% and 4.2% to close at USD91.8/b and USD85.0/b respectively. We expect oil prices to remain steady (above USD80/b) in the near term.
• The US FOMC is expected to hold its next meeting this month. The committee has reiterated its commitment to further tightening to bring inflation (currently 3.2% y/y) towards the 2% target. However, there remains the possibility of a hold stance in the September meeting, given concerns around the negative implications of further tightening on economic growth.

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