Nigeria’s inflation drops to 11.14% in July — NBS
Bonds
Yields in the bond market retraced slightly from previous day highs, as market players reacted to the lower stop rates at the previous day’s primary market auction. Yields compressed by c.9bps on the average, with the most gains witnessed on the short-end of the curve.
We however observed continued sell pressures on the mid to long end of the curve, and we expect the trend to persist, as selloff in EM assets and a continued strengthening of the US Dollar is expected to further weigh on sentiments in the market.
Treasury Bills
The T-bills market traded on a relatively flat note as the CBN resumed its OMO intervention to match inflows from Maturing bills. We also witnessed slight selloff by offshore clients which pushed yields higher on the shorter end of the curve.
Demand at today’s OMO auction was weak, as only a total of N153.54bn T-bills were sold of the N450bn offered. Stop rates were however maintained at 11.05% and 12.15% on the 91- and 203-day bills respectively.
We expect the market to remain slightly bearish tomorrow, due to the relatively weak demand in the market and an expected provisioning for a CBN retail FX auction by banks.
Money Market
Robust system liquidity saw OBB and OVN rates trend lower into single digit territory, to close at 7.83% and 8.50% respectively. The CBN floated an OMO auction to manage inflows from OMO T-bill maturities, but could only sell a total of N153.54bn due to weak demand. System liquidity consequently closed at c.N492.38bn positive on the day.
We expect funding rates to trend higher tomorrow as market players anticipate outflows for Bond Auction Settlement and Retail FX funding.
FX Market
The Naira depreciated at the interbank today, closing at N306.10/$ (0.02% lower than N306.05/$ previously). At the I&E FX window, the Naira also depreciated by 0.08% to close at N362.53/$. The cash market also saw depreciation of 0.08% to close at N359.80/$, while transfer rates appreciated by 27% to close at N362.00/$ (from N363.00/$ previously).
Eurobonds
The bullish trend previously witnessed on the NGERIA Sovereigns came to a halt in today’s session, as investors sold off across most of the traded tickers. Yields consequently trended higher by c.3bps across the curve.
Trading on the NGERIA Corps was mixed, with some demand noticed on select maturities especially at the short-end of the curve. Overall, yields compressed across the curve by c.1bps on the average DoD.
