February 22, 2024/Coronation Research
Summary
- Opening market liquidity was reported at N172.4bn on Friday (16 February ‘24). Call, overnight, and repo rates closed within a range of 7% – 17% as rates in the money market remained steady. Our expectation in the current week is that money market rates trend upward as the expected outflow from FGN bond auctions and NTB issuance would likely outweigh the expected inflow from FGN bond coupon payments.
- Last week, the average NTB yield increased by +10bps to close at 15.5% w/w while the average yield for OMO bills decreased by -10bps to close at 17.8% w/w.
- As for the secondary market for FGN bonds, the average yield increased by +60bps to close at 16.1% w/w.
- In the Eurobond market, the average yield declined by -10bps to close at 9.7% w/w.
- According to the US Bureau of Labor Statistics, U.S. inflation moderated to 3.1% y/y in January ’24 from 3.4% y/y recorded in December ’23. This can be partly attributed to moderation in energy costs (-6.4% y/y vs -2% y/y). At the latest FOMC meeting, the FED Chair pushed back against market expectations of rate cuts in March ’24, as headline inflation remains below target.
- Meanwhile, the headline inflation in the United Kingdom was unchanged at 4% y/y in January ’24. Inflationary pressure was significant in miscellaneous goods and services (4.5% y/y vs 4.3% y/y).
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