Macroeconomic Review
Nigeria’s Inflation-Reflecting the known reality

Nigeria’s inflation for March 2023 rose to 22.04% Y-o-Y (Est. +21.80%), an increase of c.0.13% from 21.91% Y-o-Y recorded in February 2023. Moreso, headline inflation printed higher at 1.86% M-o-M in March 2023 vs 1.71% recorded in February 2023. Similarly, food inflation jumped to 24.45% from 24.35% recorded in February 2023 while core inflation also amplified to 19.86% in March, compared with 18.84% in February 2023…

Fixed Income Market Review and Outlook

The extended period of sparing system liquidity in April, drove a mixed to bearish theme in the local fixed income market, as demand dropped significantly and executed trades were literally few and far between. However, liquidity influx in the latter part of the month spurred buyside interest across the treasury bills and FGN bonds market…

Money Market Review and Outlook –Tight system liquidity eased by late inflows from bond maturities, coupons and FAAC remits.

For the major part of the month, the money market was firmly in negative territory (extending the tight system liquidity situation that ensued towards the end of March), driven by Retail FX SMIS, CRR debits, NTB and FGN bonds primary market auctions. Market participants, especially banks, had to patronize CBN’s Standing Lending Facility (SLF) window to meet their obligations…

T-Bills Market Review and Outlook – Bearish theme dominated the early periods, but improved system liquidity drove late buying activity.

The effect of the tight liquidity situation spurred bearish pressures in the treasury bills space. Market participants sold their papers (mostly across the belly to the long end of the curve) to raise liquidity to fund their obligations, thus recording trading losses in the process. The impact of the selling interest also reflected in the preliminary treasury bills primary market auction, where the DMO managed rate expectation amid weak subscription levels, closing the 1-year paper at 14.70%, while maintaining the rates for the 91- and 182-day papers at 6.00% and 8.00% respectively…

FGN Bonds Market Review and Outlook –Mixed market sentiments; late buying spurred by bond coupon and maturity.

With the 2037 and 2049 papers retired by the DMO and replaced with 2042 and 2050 papers based on Q2’2023 FGN bond issuance calendar, investors shifted their attention to the on-the-run papers with mixed trading sentiments, albeit not much activity was recorded in the early periods…

Eurobond Market –Mixed to Bearish theme amid lower US inflation and underwhelming GDP report.

Positive jitters dominated the early periods in the Eurobonds market, amid the intended production cut by the OPEC+ members. The optimism around increase in crude oil price drove buyside interests for most oil producing countries, like Nigeria, as well as the spillover effect across the SSA region. However, a sharp decline in US Jobs Opening data spurred mild selloffs across the curves…

Foreign Exchange Market Review and Outlook– Prolonged decline in Gross FX reserves; Naira depreciates further against the dollar at the I&E Window.

 Activity in the FX market was relatively muted, with medium-scale volatility in rates. Cash trades at the unofficial window traded mostly between $/₦733 – $/₦741, while Inflows closed at $/₦745. However, at the official window, NAFEX rate closed at $/₦462.70 in Apr’2023, representing a ₦1.55k depreciation when compared with previous month’s close of $/₦461.15, while there was a ₦1.62k depreciation at the I&E window, as it closed at $/₦463.00…

Equities Market Performance in April –Underwhelming Nigerian Stock market’s performance amid higher inflation.

The Nigerian stock market fell by N1.010 trillion in April 2023, despite strong 2022 fiscal year corporate profitability and dividend payouts to shareholders by listed companies. Notwithstanding the stock market’s 2.25% gain in the first four months of 2023, inflationary pressures, currency scarcity, and other macroeconomic challenges have continued to erode investors’ participation in low-priced fundamental stocks listed on the Exchange. In particular, the entire market capitalization finished April 2023 at N28.534 trillion, down from N29.544 trillion…

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