Daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills, bonds, FX rates, inflation, oil price
- CBN Disconcerts Market with Further OMO Rate
- Hike as T-bill Yields Hit 7-Month High
- Global oil market eyes Nigeria, Libya as both grow production – Bloomberg
The bond market traded on a slightly bearish note today, as news of an expected hike in the CBN’s OMO stop rate fuelled slight sell on some short and mid tenor bonds. Yields were consequently higher by c.7bps on the day, but with slight buying interests still noticeable on some mid and long tenured maturities.
We expect yields to maintain a slightly upward trend going forward, in tune with the continued lift in short term rates by the CBN. Our bearish outlook is however expected to be moderated by continued buying interests from real money clients
The T-bills market remained bearish in today’s session, with yields rising by c.25bps avg., as market players repriced their bids in reaction to the expected hike in the CBN’s OMO rate.
The CBN sold a total of c.₦186bn OMO bills to mop up inflows from the c.₦372bn OMO maturities. It raised rates by c.25bps on the 98 and 182-day bills and by 50bps on the 364-day bill offered. The rates consequently cleared at 11.50%, 13.00% and 14.50% respectively. With the recent action by the CBN, yields on the long end of the curve (c.15.70%) are now at levels last seen at the start of the year (Jan 2018), while average yields (c.13.70%) are now at a 7-Month high from April 2018.
We expect the market to remain bearish tomorrow, due to expected further tightening of system liquidity via a retail SMIS by the CBN.
Following the Net OMO repayment of c.186bn in today’s session, the OBB and OVN rates moderated by c.5pct to 11.50% and 11.90% respectively. System liquidity which opened the day at c.₦4bn negative is consequently estimated to have been bolstered by the net inflows to c.₦180bn as at close of business today.
We expect rates to spike above single digits tomorrow, due to expected outflows (c.₦300bn est) for a biweekly Retail SMIS and c.₦88bn outflow for settlement of yesterday’s bond auction sales, with system liquidity consequently estimated to close the week in negative territory.
At the Interbank, the Naira/USD rate remained stable at ₦306.55/$ (spot) and ₦362.52/$ (SMIS). At the I&E FX window a total of $220.32mn was traded in 400 deals, with rates ranging between ₦330.00/$ – ₦365.00/$. The NAFEX closing rate appreciated slightly by c.0.02% to ₦363.95/$ from ₦364.01/$ previously.
At the parallel market, the cash rate reversed gains by 30k to ₦361.00/$, while the transfer rate remained unchanged at ₦364.00/$.
The NGERIA Sovereigns were slightly bearish in today’s session, with yields creeping higher by c.5bps on average. The most selloff was on the Feb 2030 which lost c.0.45pct on the day.
The NGERIA Corps were mostly flat, with better sellers seen on the DIAMBK 19s and FIDBAN 22s.
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