January 17, 2024/Coronation Research
Summary
- Opening market liquidity was reported at N381.9bn on Friday (12, January ‘24). Call, overnight, and repo rates closed within a range of 7% – 18% as rates in the money market tightened. Our expectation in the current week is that money market rates moderate as the expected inflow from coupon payments would likely outweigh the outflow from a potential CRR debit by the CBN.
- Last week, the average NTB yield declined by -270bps to close at 3.3% w/w. At the latest primary market NTB auction held last week Wednesday, the CBN offered N56.6bn but allotted N149.4bn worth of NTBs to market participants. The stop rates declined across the three tenors; 91-day: 2.44% (previously 7.00%), 182-day: 4.22% (previously 10.00%), 364-day: 8.39% (previously 12.24% y/y).
- The average yield for OMO bills declined by -250bps to close at 8.4% w/w. At the OMO auction held last week Wednesday, the CBN offered N300bn but allotted N357.2bn worth of OMO bills to market participants. The stop rates for the three tenors stood at; (97-day: 10.5%) (181-day: 14.0%), and (363-day: 17.75%).
- In the secondary market for FGN bonds, the average yield declined by -40bps to close at 13.3% w/w.
- In the Eurobond market, the average yield declined by -60bps to close at 9.9% w/w.
- According to the US Bureau of Labor Statistics, U.S. inflation rose to 3.4% y/y in December ’23 compared with 3.1% y/y recorded in November ’23. Food prices increased by 2.7% y/y vs 2.9, while shelter rose by 6.2% y/y vs 6.5%, However, inflation moderated in Energy by -2.0 y/y vs -5.4%, and gasoline -1.9% y/y vs 8.9%.
- Eurozone Manufacturing PMI increased marginally to 44.4 in December ’23 from 44.2 recorded in November ’23. The decline in factory activity is largely on the back of weaker demand, as inflationary pressure continues to impact consumer spending. The service PMI increased marginally to 48.8 in December ’23 from 48.7 in November ’23. Overall, composite PMI remained unchanged at 47.60 in December ’23.
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