November 15, 2023/Coronation Research

Summary

• Opening market liquidity was reported at -N91.5bn on Friday (10 November ‘23). Call, overnight, and repo rates closed within a range of 4% – 18% as rates in the money market tightened. This week, we expect money market rates to remain elevated largely due to projected outflow from FGN Bond and NTB auctions as well as possible CRR debits.
• The average NTB yield decreased by -93bps to close at -13.4% w/w. At the latest primary market NTB auction held last week Wednesday, the CBN offered and allotted N310bn worth of NTBs to market participants. The stop rates changed across all tenors; 91-day: 7% (previously 9%), 182-day: 11% (previously 13%), 364-day: 16.75% (previously 13%).
• The average yield for OMO bills decreased by -5bps w/w to close at 15.9%.
• Meanwhile, in the secondary market for FGN bonds, the average yield increased by +6bps to close at 15.7% w/w. 
• In the Eurobond market, the average yield increased by +48bps to close at 11.5% w/w.
• According to the Office for National Statistics, UK GDP remained unchanged at 0.6% y/y in Q3 ’23 as recessionary pressures continue to linger. The muted growth can be partly attributed to the slowdown in public expenditure (0.1% y/y vs 1.3% y/y), business investment (2.8% y/y vs 9.2% y/y), and exports (-6.6% y/y vs 3.2% y/y). Meanwhile, on a q/q basis, GDP flattened at 0% in Q3 ’23 compared with 0.2% recorded in Q2 ’23.
• According to China’s National Bureau of Statistics, headline inflation recorded a deflation of -0.2% y/y in October ’23 compared with 0% y/y recorded in September ’23. This marks the second deflation recorded in 2023 and can be partly attributed to weakened consumption patterns. The deflation was largely significant in transport (-0.9% y/y vs 1.3% y/y) and food (-4% y/y vs -3.2% y/y) as ample supply of food commodities outweighed demand.

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