January 3, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N156.4bn on Friday (29 December ‘23). Call, overnight, and repo rates closed within a range of 4% –16% as rates in the money market moderated. Our expectation in the current week is that money market rates trend upwards as system liquidity tightens due to a potential CRR debit by the CBN
• Last week, the average NTB yield declined by -180bps to close at 6.3% w/w. At the latest primary market NTB auction held last week Wednesday, the CBN offered N67.0bn, but allotted N317.0bn worth of NTBs to market participants. The stop rates changed across the three tenors; 91-day: 7.00% (previously 6.25%), 182-day: 10.00% (previously 11.00%), 364-day: 12.24% (previously 13.50% y/y).
• The average yield for OMO bills remained unchanged to close at 11.4% w/w.
• In the secondary market for FGN bonds, the average yield declined by -30bps to close at 14.1% w/w.
• According to S&P Global, UK Manufacturing PMI declined to 46.2 in December ’23 compared with 47.2 in November ‘23. This reading marks a tenth consecutive decline and can be partly attributed to sluggish economic activities on the back of weakened consumer demand. Meanwhile, Service PMI rose to 52.7 in December ’23 vs 50.9 in November ’23. Overall, the Composite PMI rose marginally to 51.7 in December ’23 vs 50.7 in November.
• The US Manufacturing PMI declined to 47.9 in December ’23 compared with 49.4 in November ‘23. This marks the lowest reading since September ’23 and can be partly attributed to sluggish demand for inputs in the sector. Meanwhile, Service PMI increased marginally to 51.3 in December ’23 vs 50.8 In November ’23. Overall, the Composite PMI rose to 51.0 in December ’23 vs 50.7 in November ’23 Looking ahead, business expectations signal subdued growth in Q1-2024.

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