July 31, 2024/Coronation Research

Summary

• Opening market liquidity was reported at N276.5bn on Friday (26, Jul ‘24). Call, overnight, and repo rates closed within the range of 9.9% – 26.7%, as rates in the money market remain tight.
  
• Last week, the average NTB yield increased by +34bps to close at 25.2% w/w. At the latest primary market NTB auction held last week, the CBN offered and allotted N277.9bn worth of NTBs to market participants. The stop rates stood at: 91-day: 18.5%, 182-day: 19.5%, and 364-day: 22.1%.
• The average yield for OMO bills increased by +64bps to close at 25% w/w.
• In the secondary market for FGN bonds, the average yield increased by +4bps to close at 19.5% w/w. The DMO held its latest monthly auction of FGN Bonds (22, July ’24). It offered N300bn but raised N225.7bn through re-openings of the 19.30% FGN APR 2029, 18.50% FGN FEB 2031 and 19.89% FGN MAY 2033. The bids were allotted at marginal rates of 19.89% (previously: 19.64%), 21% (previously: 20.19%), and 21.98% (previously: 21.5%) respectively. Demand at this auction was lower at N279.7bn compared with N305.3bn in June ’24.
• China’s Manufacturing PMI remained steady at 49.5 in June ’24. This reading marks the fourth consecutive contraction in factory activities since March ’24 partly due to weak demand. The services PMI declined to 51.2 in June ’24 from 54 in May ’24. Overall, the composite PMI declined to 52.8 in June ’24 from 54.1 in May ’24.
• At its July meeting, the People’s Bank of China (PBoC) reduced rates by -10bps to stimulate economic growth. The 1-year loan prime rate (LPR) decreased to 3.35% from 3.45% in June ‘24, the 5-year loan prime rate also declined to at 3.85%. It is worth noting that this is the first rate cut since August ‘23.

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