March 29, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N79.7bn on Friday (22, March ‘24). Call, overnight, and repo rates closed within a range of 5% – 28% as rates in the money market moderated.
• Last week, the average NTB yield declined by -91bps to close at 17.7% w/w. while the average yield for OMO bills decreased by -29bps to close at 18.5% w/w. 
• In the secondary market for FGN bonds, the average yield increased by +86bps to close at 19.3% w/w. At the latest bond auction held on Monday (18 March ’24). The DMO offered N450.0bn but raised N608.8bn through the issuance of the 19.94% FGN MAR 2027 and re-openings of the 18.50% FGN FEB 2031, and 19.00% FGN FEB 2034 FGN bonds. The bids were allotted at the marginal rates of 19.94%, 20.00%, and 20.45% respectively. The demand at this auction primarily reflects system liquidity on the back of a recent FGN bond maturity and coupon payments.
• In the Eurobond market, the average yield declined by -60bps to close at 9.5% w/w.
• The Eurozone headline inflation moderated to 2.6% y/y in February ’24 compared with 2.8% y/y recorded in January ’24. This is the lowest rate in since November ’23. Energy prices declined by -3.7% y/y vs -6.1% y/y, while the pace of price rises moderated for both food, alcohol, and tobacco (3.9% y/y vs 5.6% y/y) and non-energy industrial goods by (1.6% y/y vs 2.0% y/y). However, services inflation remained unchanged at 4% y/y. At its latest meeting held in March ’24, the ECB held its key policy interest rates. The main refinancing rate, the deposit facility and the marginal lending facility rate remained unchanged at 4.5%, 4% and 4.75% respectively.
• Headline inflation in the United Kingdom moderated to 3.4% y/y in February ’24 compared with 4% y/y recorded in January ’24. The moderation was significant in food and non-alcoholic beverages (5.0% y/y vs 6.9% y/y), restaurants and hotels (6.0% y/y vs 7.0% y/y), recreation and culture (5.4% y/y vs 5.7% y/y), and miscellaneous goods and services (3.6% y/y vs 4.5% y/y). Meanwhile, the Bank of England (BOE) held its key policy interest rate at 5.25% at its March ’24 meeting, as inflation continues to moderate. Looking ahead, the BOE is optimistic about Britain’s economic trajectory, but stressed the necessity for greater certainty regarding inflation.

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