February 24, 2024/Coronation Research
Summary
- Opening market liquidity was reported at N347.5bn on Friday (09 February ‘24). Call, overnight, and repo rates closed within a range of 7% – 17% as rates in the money market moderated. Barring any significant inflow or outflow, our expectation in the current week is that money market rates maintain current levels.
- Last week, the average NTB yield increased by +570bps to close at 15.4% w/w. This can be attributed to sell-offs induced by the CBN’s revised NTB auction offer. At the latest primary market NTB auction held last week Wednesday, the CBN offered and allotted N1trn worth of NTBs to market participants. The stop rates increased across the three tenors; 91-day: 17.24% (previously 5.00%), 182-day: 18.00% (previously 7.15%), 364-day: 19.00% (previously 11.54% y/y).
- The average yield for OMO bills increased by +830bps to close at 17.9% w/w. The recorded increase can be partly attributed to higher yields at the primary market NTB auction.
- In the secondary market for FGN bonds, the average yield increased by +70bps to close at 15.5% w/w.
- In the Eurobond market, the average yield declined by -10bps to close at 9.8% w/w.
- According to S&P Global, US manufacturing PMI increased marginally to 50.7 in January ’24 from 47.9 recorded in December ‘23. This reading marks the highest since September ’22 and can be partly attributed to improved domestic demand supported by a slower contraction in output. Services PMI declined to 52.5 in January ’23 from 51.4 in December ’23. Composite PMI increased to 52.0 in January ’24 from 50.9 in December ’23.
- Meanwhile, China’s Manufacturing PMI remained unchanged at 50.8 in January ’24 when compared to the previous month, as output growth remained stable. Services PMI declined marginally to 52.7 in January ’24 from 52.9 in December ’23 and composite PMI slowed to 52.5 in January ’24 from 52.6 in December ’23. Looking ahead, business sentiment remains positive, linked to forecasts of stronger global demand and planned investments.
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