November 11, 2024/InvestmentOne Report

Liquidity condition in the financial system remained tight in October 2024, owing to multiple funding pressures from the primary market auctions held during the month. As such, we saw interbank rates print above c.30.00% levels for most part of the month. Specifically, the Open Buy Back and Overnight lending rates averaged 30.59% and 30.97%, marking a respective 291bps and109bps increase compared to the previous month.

Our outlook for the fixed income market in November 2024 remains slightly bearish, as yields are expected to stay elevated, amid the likelihood of further upward adjustments. This is premised on the CBN s hawkish stance towards reining in inflation and its commitment to enhance competitiveness for foreign capital. Furthermore, macro indicators largely support the outlook for a bearish market, particularly due to the upside risk to inflation, following the revision to PMS pump prices in October. The pockets of liquidity (like bond coupons and FAAC inflows) expected in November, may be unable to offset system illiquidity. Kindly find HERE, the full report, covering our analysis and considerations.