FIXED INCOME MARKETS
MONEY MARKETS
System liquidity balance was in deficit throughout the week, despite a slight improvement from the previous week. Consequently, the Open Repo Rate (OPR) and the Overnight Rate (O/N) declined by 45bps and 8bps to 31.61% and 32.45% week-on-week.
Outlook: We expect the interbank rates to stay elevated next week, given that the bond coupon inflows on July 2034 paper is only ₦65.00 billion.
Treasury Bills
The treasury bills market experienced a bearish trend for most of the week, driven by the tight liquidity and increased stop rates. Specifically, the DMO offered c.₦166.10 billion but allotted ₦207.27 billion. The stop rate for the 91-Day and 182-Day papers remained unchanged at 16.3000% and 17.440%, respectively, while the rate on the 364-Day paper increased by 56bps to 21.2400% compared to the previous auction. As a result, the average mid-rate increased by 41 bps week-on-week to 21.84%.
Outlook: We expect the bearish sentiment to persist next week.
FGN Bonds
Similarly, the FGN local bonds market maintained a bearish posture throughout the week. Overall, the average mid-yield increased by 26 bps to 19.17% week-on-week.
Outlook: We expect the bearish sentiment to linger. Meanwhile, the DMO rescheduled the FGN bond auction from July 15 to July 22 (please see the attached document).
Equities
The Nigerian stock market ended bearish this week, with the ALL-Share Index dropping by 0.35% week-on-week to close at 99,671.28 points. The year-to-date return stood at 33.30%, and the market capitalization concluded the week at ₦56.44 trillion.
Outlook: We expect a similar trend next week.
Foreign Exchange
Naira depreciated against the USD by 3.59% week-on-week, to $/₦1,563.80
Outlook: We expect volatility to persist next week.
Eurobonds
The Eurobonds market had a mixed-to-bullish trend in the first half of the week, partly due to weakness reported in the labour market. Additionally, buying interest intensified after the US CPI printed at 3.00%, down from 3.30% in May and lower than the expected 3.10%. Overall, the market closed with a bullish tone as the average mid-yield fell by 33bps week-on-week to 9.62%.
Outlook: We expect some economic data like US retail sales, housing stat and Initial Jobless Claims to impact the market, in addition to Jerome Powell’s speech.
Commodities
The price of crude oil closed lower this week due to strong bearish sentiment at the beginning of the week. Brent oil fell by 1.35% to reach $85.37 per barrel, while WTI declined by 0.57% to $83.16 per barrel. Conversely, the price of gold increased by 0.78% to $2,416.30 per ounce.
Outlook: We expect a similar trend of volatility next week.
