FIXED INCOME MARKETS
Money Markets
During the early part of the week, system liquidity was positive. As the week progressed, liquidity improved and resulted in a surplus balance from the middle of the week to the end. Consequently, the Open Repo Rate (OPR) and the Overnight Rate (O/N) decreased by 109 bps and 99 bps to 32.30% and 32.98% respectively, compared to the previous week.
Outlook: We anticipate that the system liquidity will improve next week, as the FGN offer size has been reduced, and there are Bond coupons worth approximately ₦365.01 billion and the possibility of early FAAC credits.
Treasury Bills
The treasury bills market saw a bullish trend this week, with significant buying interest across the curve. Overall, the average mid-rate decreased by 82 bps week-on-week, settling at 20.72%.
Outlook: We expect sentiment to be skewed towards the NTB auction next week, where the DMO would be offering ₦409.98 billion.
FGN Bonds
The local FGN bond market had a bullish settlement this week, with minimal bearish bias. As a result, the average mid-yield decreased by 18 bps to 19.39% on a week-on-week basis.
Outlook: We expect sentiment to be skewed towards the FGN Bond auction next week.
Equities
The Nigerian stock market ended the week on a bearish note as the ALL-Share Index experienced a 1.51% week-on-week decline, finishing at 97,100.31 points. The year-to-date return was 29.86%, and the market capitalization concluded the week at ₦55.13 trillion.
Outlook: We expect market to continue to trade sideways.
Foreign Exchange
The Naira depreciated against the USD by 0.36% week-on-week, reaching $1,579.89/₦.
Outlook: We expect players to anticipate the outcome of the first domestic dollar bond issuance, where the DMO would be offering $500.00 million in domestic dollar bond.
Eurobonds
The Eurobonds market was mostly bullish this week, with the average mid-yield falling by 15bps, week-on-week to 10.23%.
US inflation grew by 0.20% m/m, in line with market forecasts. However, year-on-year inflation grew by 2.90% y/y, lower than the estimated 3.0% y/y.
The US Producer Price Index (PPI) increased by 2.20% year-on-year, down from 2.70% year-on-year, and by 0.10% month-on-month, down from 0.20% month-on-month in June.
Outlook: Next week, the minutes of the last FOMC meeting and speeches by some members of the committee would impact the market.
Commodities
Crude oil was volatile this week. The catalysts were geopolitical tensions between Iran and Israel, OPEC’s downward revision of global oil demand, and strong US retail sales data. Overall, brent oil increased by 0.99% to $79.70 per barrel, while WTI declined by 0.31% to $76.60 per barrel. The price of gold increased by 0.33% to $2,532.00 per ounce.
Outlook: We expect a mixed trend next week.
