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PMA Rates Trend lower as Market Players Oversubscribe the 1-yr bill by over 1,100%

Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.

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NSE records 18.18% decline in banks' market capitalisation

Welcome to Nairametrics‘ summary of the daily performance of major economic indicators and highlights from trading sessions and key statistics such as Treasury Bills and Bonds. This is brought to you by Zedcrest.

This report is dated May 19th, 2019.

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***US FED left benchmark rates unchanged, does not expect to cut rates until 2020***

Key Indicators

Bonds: It was a quiet trading session for the FGN Bond Market, with little volumes seen across the curve. We witnessed demand for short-dated maturities, most notably the 2021 maturity which gained +46bps on the day. Bids at across the mid- to long-end of the curve closed higher causing yields to compress by a single basis point on the average across the benchmark bond curve.

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As issuances of corporate debt continue to provide competition for use of funds, we expect institutional investors to adopt a cautious approach to bonds in the near term.

Treasury Bills: The bullish run in the Treasury Markets remained in today’s session, as yields across the Benchmark NTB curve compressed further by c.9bps on the average. Demand peaked across, the mid- to long-dated maturities, as investors chased available yields.

At the PMA, the DMO rolled over a total of N17.61Bn in maturing treasury bills across three maturities.  The stop rates were closed lower for the 91- and 182- and 364-day tenors at 9.60% (+40bps), 11.89% (+6bps) and 12.02% (+32bps) respectively. Demand again was skewed to 364-day tenor, with a bid-to-cover ratio of 11.05X.

Following the bullish outcome of today’s auction, we expect the bullish sentiments to remain in the Treasury Bills market as OMO maturities of c.N89bn hit tomorrow.

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Patricia

Money Market: OBB and OVN rates closed the session lower at 6.86% and 7.50% respectively, as system liquidity closed at c.N217bn positive.

We expect rates to moderate later in the week, with c.N89bn expected in OMO maturities this week, with an outside chance for the Apex bank to mop-up maturities with an OMO auction.

FX Market: At the interbank, the Naira/USD rate remained stable to close at N306.95/$ (spot) and N356.92/$ (SMIS), with relatively no change at the I&E window which closed at N360.53/$.

The Naira also held steady at the parallel market, as transfer rate closed unchanged at N362.50/$, while the cash rate appreciated by 20kobo to close at N359.80/$.

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Eurobonds: Profit taking activities saw a slowdown in the bullish run of the NIGERIA Sovereigns papers leading up to the US Fed rate decision. The optimism of a trade-war truce looks as well as the US Fed decision reinforcing it’s dovish lean, continue to support Emerging Market assets in the coming weeks.

Yields compressed further by c.8bps on the average across the sovereign curve.

Investor demand for the NIGERIA Corps prevailed in today’s session, as investors position against a drop in yields by exiting callable papers. Demand remained strong for the UBA 2022, FIDBAN 2022 and ETINL 2024, which all gained c.+8bps on the day.


Contact us: Dealing Desk: 01-6311667 Email: research@zedcrestcapital.com

Disclaimer: Whilst proper and reasonable care has been taken in the preparation and accuracy of the facts and figures presented in this report, no responsibility or liability is accepted by Zedcrest Capital or its employees for any error, omission or opinion expressed herein. This report is not an investment advice or a research recommendation and should not be regarded as such. The information provided herein is by no means intended to provide a sufficient basis on which to make an investment decision.

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Business News

Microsoft Teams’ rival, Slack shares drop on withdrawal of full-year billings guidance

Slack reported steady revenue growth 50% in Q1 2020, compared with 49% recorded in Q1 2019 on an annualized basis this brought in more customers

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 Slack shares dropped as much as 17% yesterday after the company’s reported first-quarter earnings.

Investors and stock traders were not happy with Slack’s annual revenue forecast of $855 million to $870 million, up just slightly from Slack’s projection in March stock analysts, on the average, estimated $856.5 million, according to data obtained from Bloomberg.

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“Slack’s withdrawal of full-year billings guidance looks conservative to us and likely suggests a pull-forward of revenue amid faster new-customer additions due to remote work,” Mandeep Singh, a Bloomberg Intelligence analyst, wrote in a note yesterday.

Slack grew revenue 50% in Q1 2020, compared with 49% recorded in Q1 2019 on an annualized basis.

However, Slack reported steady revenue growth during  Q1 2020 that brought in more customers, as organizations sought to keep communications going with their newly remote workforces during coronavirus pandemic. It had earnings per share of 2 cents loss per share, adjusted and adjusted revenue of $201.7 million

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(READ MORE: How to Profit from Directors’ Share Dealing Notifications)

Slack, in a statement, yesterday reported that it added a record 12,000 paid customers Q1 2020 as against two prior quarters when it added about 5,000 new customers. Slack’s top competitor, Microsoft’s Teams, has also experienced growth in recent months.

“What you saw with Zoom, what you saw with Teams is a great indication that this is not apples-to-apples and that the products are not truly competitive with one another,” Butterfield the Chief Executive Officer of Slack told Investment analysts on a conference call yesterday.

Paid users spent over 120 minutes per day in Slack at the end of the quarter, up from below 90 minutes one quarter earlier. 

“I can’t care about the stock price on the level of individual days,” Butterfield said when asked about the reaction to earnings. “I just wouldn’t be able to do my job. I care about where the share price is five years from now and 10 years from now. This is just a very volatile time.” 

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Patricia

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Precious metals slump, investors focus on Central Bank’s intervention

Gold fell on Friday morning to $1,717.10. as global investors await the release of Friday’s U.S non-farm payrolls data for May

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Nigeria Mining Sector shows growth prospect despite low bank credit provision, Gold hits eight-year high as global recession sentiments strengthened, Gold hits three weeks high, Investors rush to gold, Gold Future Drops to $1727.80 as Tensions Escalate between America and China, Precious metals slump, investors focus on Central Bank’s intervention

Spot gold went slightly lower, trading at $1,711.57 per ounce by 4 am local time on Friday morning and gold futures was down to $1,717.10.

Gold collapsed like a house of cards as investors overlooked civil unrest in the United States and heavily focused on hopes around central bank intervention and economic recovery,” said Lukman Otunuga, senior research analyst at FXTM.

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Gold fall on Friday morning also came as global investors await the release of Friday’s U.S (United States.) non-farm payrolls data for May, scheduled to be released at 1.30 pm Nigerian local time.

“There are quite a few market participants still bargain-hunting gold given the fundamental backdrop of the coronavirus crisis and ongoing recession,” Julius Baer analyst Carsten Menke said.

(READ MORE: Gold prices surge by 17.4% in 2 months due to global economic crisis)

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However, investors are still waiting to see whether the easing of restrictions will lead to a second wave of infections, supporting demand for gold, Menke added.

Gold, Gold prices tick up as President Trump decides on China today, Gold Prices Surges, Protests Erupts In America, Precious metals slump, investors focus on Central Bank’s intervention

What you need to know about Precious metals: Precious metals include gold, silver, and platinum. Gold and silver are the most popular metals, and have been used by jewelers, and as wealth status symbols since ancient times. Global investors use precious metals to hedge against inflation.

Meanwhile, palladium gained 0.34% to $1,947 an ounce, while platinum lost 0.31% to $833.91. Silver was down 0.63% to $17.9 4am local time, having hit a more than three-month high of $18.36 on Monday. 

“Some people are buying silver just because it’s much cheaper than gold (or) platinum,” a trader from Tokyo-based retailer Tokuriki Honten said.

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Patricia

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Business News

Tether expected to surpass Ethereum, based on strength of the U.S dollar

The organic growth of Tether’s market capitalization is one of the major reasons for the gain Bitcoin (BTC) is presently having in the mid-term.

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Tether expected to surpass Ethereum, based on strength of the U.S dollar

Tether, the third most valuable cryptocurrency with a market capitalization of about $9.1 billion, is expected to pass Ethereum ($27 billion)) as the number two cryptocurrency, on the strength of the dollar.

Bloomberg News reported recently that there is a high probability that it expects Tether (USDT) to outsize Ethereum (ETH) in market capitalization.

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The report outlines the organic growth of Tether’s market capitalization as one of the major reasons for the gain Bitcoin (BTC) is presently having in the mid-term.

“Interest in digital links to the dollar represents the need to handle and store value in the world’s reserve currency without an intermediary.” 

(READ MORE:Bitcoin loses $1500 in 3 mins, pigs get slaughtered in BTC market)

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What you need to know: Tether is designed as a blockchain-based cryptocurrency whose digital coins in circulation are backed by the same value of traditional fiat currencies, like the U.S dollar, Japanese Yen, or the Euro. It trades under the ticker symbol USDT.

Tether expected to surpass Ethereum, based on strength of the U.S dollar

Recall that Nairametrics earlier reported how Tether had overtaken XRP (XRP) as the number three most valuable cryptocurrency by market capitalization. Bloomberg reports added that the momentum with the help of the U.S dollar is expected to make Tether gain and move to the second spot:

“Absent an unlikely reversal in predominant crypto trends, it should be a matter of time until Tether passes Ethereum to take the No. 2 spot in total assets behind Bitcoin. Receiving help from widespread adoption with a workable case as a proxy for the world’s reserve currency, there seems little to stop the increasing adoption of the dollar-linked stable coin.” 

Also, Bloomberg’s report expects Tether to rise based on Ethereum’s limited upside. 

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“We see little upside in the ETH price absent a rising tide from Bitcoin. The pre-eminent crypto is breaking away from the pack in terms of adoption and is supported by almost-ideal macroeconomic conditions for stores-of-value amid quantitative easing.  

Patricia

“Tether is in a similar position. Strengthening Dollar Supports Stable Coins. The advancing dollar will fuel demand for the Tether stable coin, in our view. In terms of gold and Bitcoin, the dollar is depreciating, but it is going in the other direction vs. most other currencies.  

“The greenback appears best positioned as global currency values retreat, with all facing unlimited supply.  

“Tether and stable coins are gaining traction as vehicles for dollar exposure without intermediaries and for transferring value among the numerous highly speculative and volatile crypto assets.” 

 

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