January 30, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N210.4bn on Friday (26, January ‘24). Call, overnight, and repo rates closed within a range of 7% – 19% as rates in the money market moderated following inflows from the FGN bond coupon payments and CRR refunds. Our expectation in the current week is that money market rates moderate as the expected inflow from FAAC allocation would likely outweigh the outflow from the expected bond auction.
• Last week, the average NTB yield increased by +330bps to close at 6.7% w/w. At the least primary market NTB auction held last week Wednesday, the CBN offered and allotted N231.8bn worth of NTBs to market participants. The stop rates increased across the three tenors; 91-day: 5.00% (previously 2.44%), 182-day: 7.15% (previously 4.22%), 364-day: 11.54% (previously 8.40% y/y).
• 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 13.8% w/w.
• In the Eurobond market, the average yield increased by +10bps to close at 10% w/w.
• According to China’s Bureau of Statistics, China recorded a deflation of -0.3% y/y in December’23 compared with 0.5% y/y recorded in November ‘23. Food prices declined by -3.7% y/y vs -4.2. However, non-food inflation increased by 0.5% y/y vs 0.4% y/y and clothing by 1.4% y/y vs 1.3% y/y.
• According to the US Bureau of Economic Analysis, GDP moderated to 3.3% y/y in Q4 ‘23, compared with 4.9% y/y recorded in Q3 ’23. For FY2023, the US economy grew by 2.5% y/y vs 1.9% y/y in FY2022. This can be attributed to robust consumer spending supported by a resilient labour market.

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