FIXED INCOME MARKETS
Money Markets
This week, system liquidity improved due to inflows from FAAC and Bond Coupon. As a result, the Open Repo Rate (OPR) and the Overnight Rate (O/N) decreased by 526bps and 536bps to 26.13% and 26.66% respectively, compared to the previous week.
Outlook: In the absence of any significant inflows, interbank rates should increase slightly.
Treasury Bills
The treasury bills market had a bearish close this week due to the benchmark interest rate hike and an uptick in stop rates at the NTB auction. Specifically, the DMO offered around ₦277.96 billion and allotted the same amount, with a total bid/cover ratio of 1.35x. The stop rates for the 91-Day, 182-Day, and 364-Day papers increased by 220bps, 206bps, and 86bps to 18.5000%, 19.5000%, and 22.1000%, respectively. As a result, the average mid-rate rose by 56 bps week-on-week to reach 22.26%.
Outlook: We expect a mixed sentiment next week.
FGN Bonds
The FGN local bonds market also closed the week on a bearish note due to an increase in stop rates across the on-the-run bonds. The DMO offered ₦300.00 billion but allotted a total of c.₦225.72 billion across the three tenors. The stop rates for the 2029, 2031, and 2033 papers closed higher compared to the previous auction at 19.89% (+0.25%), 21.00% (+0.81%), and 21.98% (+0.48%), respectively. As a result, the average mid-yield rose by 26 bps to 19.56% week-on-week.
Outlook: We expect a mixed sentiment next week.
Equities
The Nigerian stock market had a bearish end this week, with the ALL-Share Index dropping by 2.33% week-on-week, closing at 98,201.49 points. The year-to-date return was at 31.33%, and the market capitalization ended the week at ₦55.61 trillion.
Outlook: We expect the bearish sentiment to ease next week.
Foreign Exchange
Naira depreciated against the USD by 0.77% week-on-week, to $/₦1,609.29.
Outlook: We expect volatility to persist next week.
Eurobonds
The Eurobonds market concluded the week with a downward price trend, as the average mid-yield across the Nigerian curve rose by 8 bps to 9.99%. In the US, GDP growth in Q2’24 climbed to 2.80%, exceeding the market forecast of 2.10% and the 1.40% recorded in Q1’24. Furthermore, the US Core PCE Price Index remained at 2.60%, aligning with prior data and the consensus estimate.
Outlook: We expect the US Job Market report and Interest rate decision to impact the market next week.
Commodities
This week, the price of U.S. crude dropped because of worries about demand in China, despite robust economic growth in the U.S. To specify, Brent oil saw a 2.47% decrease to $80.59 per barrel, while WTI rose by 2.31% to $78.28 per barrel. Additionally, the cost of gold went down by 0.63% to $2,384.00 per ounce.
Outlook: We expect a similar trend of volatility next week.
