March 6, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N591.1bn on Friday (01, March ‘24). Call, overnight, and repo rates closed within a range of 6% – 28% 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 the NTB auction would likely outweigh the inflow from NTB maturity.
• Last week, the average NTB yield increased by +50bps to close at 17.2% w/w.
• The average yield for OMO bills increased by +10bps to close at 17.9% w/w. At the OMO auction on Friday, the CBN offered N500bn but allotted N1.1trn worth of OMO bills to market participants. The stop rates increased for all three tenors at; 95-day: 19% (previously 10%), 179-day: 19.5% (previously 13.5%), and 361-day: 21.5% (previously 17%).
•  As for the secondary market for FGN bonds, the average yield increased by +50bps to close at 17.3% w/w.
• While in the Eurobond market, the average yield remained unchanged to close at 9.9% w/w.
• Eurozone Manufacturing PMI declined marginally to 46.5 in February ’24 from 46.6 recorded in January ’24. This reading marks the second slowest deterioration since March ’23. The decline in factory activity is largely on the back of weaker demand. The service PMI increased to 50.0 in February ’24 from 48.4 in January  ’24. Overall, composite PMI rose to 48.9 in February ’24 from 47.9 in January ’24.
• China’s Manufacturing PMI increased slightly to 50.9 in February ’24 from 50.8 in January ’24. This reading marks the fourth consecutive growth in industry activities and the strongest pace since August ’23. Looking ahead, business sentiment remains strengthened linked to forecasts of stronger global economic conditions and planned investments.   

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