December 29, 2023/Coronation Research

Summary

• Opening market liquidity was reported at N211.5bn on Friday (22 December ‘23). Call, overnight, and repo rates closed within a range of 5% – 16% as rates in the money market moderated. Our expectation in the current week is that money market rates trend upward as the projected outflow from the NTB auction would likely outweigh the inflow from NTB maturity
• Last week, the average NTB yield declined by -20bps to close at 8.1% w/w.
• The average yield for OMO bills declined by -150bps to close at 11.4% w/w. At the OMO auction held last week Wednesday, the CBN offered N100bn and allotted N100.8bn worth of OMO bills to market participants. The stop rates for the two tenors stood at; (181-day: 12.0%), and (356-day: 15.0%).
• In the secondary market for FGN bonds, the average yield remained unchanged to close at 14.4% w/w.
• As for the Eurobond market, the average yield declined by -20bps to close at 9.7% w/w
• Inflation in the United Kingdom moderated to 3.9% y/y in November ’23 vs 4.6% y/y recorded in October ’23. This is the lowest headline inflation recorded since September ’21. The moderation was significant in transport (-1.5% y/y vs 0.5% y/y), recreation and culture (5.3% y/y vs 6.4% y/y and food and non-alcoholic beverages (9.1% y/y vs 10.1% y/y).
• Last week, the Bank of England (BOE) held its key policy interest rate at 5.25% for a third consecutive meeting, as Inflation continues to moderate. Looking ahead, the BOE is of the opinion that an extended period of restrictive monetary policy would be necessary to further tame inflation. 

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