January 24, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N629.8bn on Friday (22, January ‘24). Call, overnight, and repo rates closed within a range of 8% – 24% as rates in the money market tightened. Our expectation in the current week is that money market rates trend upward as the expected outflow from OMO issuance and NTB auctions would likely outweigh the inflow from the expected coupon payments and potential CRR debits.
• Last week, the average NTB yield increased by +10bps to close at 3.4% w/w.
• The average yield for OMO bills remained unchanged to close at 8.4% w/w. At the OMO auction, the CBN offered N300bn but allotted N301.0bn worth of OMO bills to market participants. The stop rates for the three tenors stood at; 92-day: 10.0%, 183-day: 13.5%, and 365-day: 17.5%.
• In the secondary market for FGN bonds, the average yield increased by +10bps to close at 13.4% w/w.
• In the Eurobond market, the average yield increased by +9 to close at 10.0% w/w.
• According to the Office of National Statistics, UK headline inflation increased to 4.0% y/y in December ’23 vs 3.9% y/y recorded in November ’23. This marks the first increase in the headline inflation in ten months. Inflationary pressure was significant in the cost of alcohol and tobacco prices (12.9% y/y vs 10.2% y/y), clothing and footwear (6.4% y/y vs 5.7% y/y), and furniture and household equipment (2.5% y/y vs 2.3% y/y). Meanwhile, inflation moderated in food and non-alcohol (8% y/y vs 9.2% y/y), restaurants and hotels (7% y/y vs 7.5% y/y), transport (-1.1% y/y vs -1.5% y/y).
• According to China’s Bureau of Statistics, GDP increased by 5.2% y/y in Q4 ’23, compared with 4.9% y/y recorded in Q3 ’23. For FY2023, GDP grew by 5.2% y/y, surpassing the initial target of 5.0% y/y. However, this is low when compared to the pre-COVID, underscoring weak consumption patterns, the lingering effects of the prolonged downturn in the property sector as well as global headwinds.

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