January 8, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N175.3bn on Friday (05, January ‘24). Call, overnight, and repo rates closed within a range of 8– 15% as rates in the money market tightened. 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 -30bps to close at 6.0% w/w.
• The average yield for OMO bills declined by -50bps to close at 11.9% w/w.
• In the secondary market for FGN bonds, the average yield declined by -40bps to close at 13.7% w/w.
• In the Eurobond market, the average yield increased by +90bps to close at 10.5% w/w.
• The Eurozone headline inflation rose to 2.9% y/y in December ’23 compared with 2.4% y/y recorded in November ’23. This marks the first uptick in inflation since April ’23 and can be attributed to energy-related base effects. Energy prices declined by (-6.7% vs -11.5%), while services remained unchanged at (4.0%). Furthermore, inflation moderated in food, alcohol, and tobacco (6.1% vs 6.9%), and non-energy industrial goods (2.5% vs 2.9%).
• China’s PMI increased marginally to 50.8 in December ’23 from 50.7 in November ’23. This marks the highest reading since August ‘23. This can be partially attributed to sluggish recovery given weakness in the property sector and industrial activities. The service PMI increased to 52.9 in December ’23 from 51.5 in November ’23. Overall, composite PMI increased to 52.6 in December ‘23 from 51.6 in November ‘23

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