October 9, 2023/Coronation Research

Summary

• Opening market liquidity was reported at N532.9bn on Friday (06 October ‘23). Call, overnight, and repo rates closed within a range of 1% – 7% as rates in the money market moderated. This week, we expect rates to trend upwards as the projected outflow from an NTB auction is expected to outweigh the potential inflow from an NTB maturity.
• The average NTB yield increased by +5bps to close at 8% w/w. Meanwhile, the average yield for OMO bills declined by -3bps w/w to close at 12.1%.
• As for the secondary market for FGN bonds, the average yield declined by -3bps to close at 14.4% w/w.
• In the Eurobond market, the average yield increased by +79bps to close at 12.6% w/w.
• According to S & P Global, US manufacturing PMI increased to 49.8 in September ’23 from 47.9 recorded in August ’23. Services PMI recorded a marginal decline to 50.1 in September ’23 from 50.5 recorded in August ’23. Overall, composite PMI remained unchanged to close at 50.2 in September ’23.
• UK manufacturing PMI increased to 44.3 in September ’23 from 43.0 recorded in August ’23. Meanwhile, services PMI marginally declined to 49.3 in September ’23 from 49.5 recorded in August ’23. Overall, composite PMI also marginally declined to 48.5 in September ’23 from 48.6 recorded in August ’23. Looking ahead, business confidence is expected to improve on the back of the recent policy action by the Bank of England (BOE).  Recall that in its September ’23 meeting, the BOE opted to maintain its policy rate at 5.25%. Furthermore, the committee disclosed that it expects inflation to continue to moderate in the near term. However, further increases to the interest rate may be required to bring inflation to the 2% target.

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