System Liquidity
System liquidity tightened as funding pressures from the August FGN Bond PMA settlement drained the system, even as funding costs held steady. Rates should stay anchored near current levels next session as the bulk of the auction-related drain has now been absorbed.
Treasury Bills
The NTB market traded calm-to-bullish, supported by excess system liquidity and the absence of a midweek auction, with demand concentrated on select short-dated bills pushing discount rates lower there. With no NTB auction scheduled this week, demand should stay anchored on the same bill.
FGN Bonds
Secondary market activity stayed active following the week’s auction, supported by strong demand for the reopened maturities and concentrated around the belly of the curve. The short end rallied while longer-dated yields held broadly stable. Trading should remain concentrated in the same tenors as investors continue positioning around post-auction levels.
Eurobonds
The Nigerian Eurobond curve turned mildly bullish, supported by sustained offshore demand and elevated oil prices underpinning the fiscal and reserve outlook, even as global Treasury yields stayed elevated. Selective buying and further downward repricing are expected, though profit-taking could moderate the pace of the rally.
Nigerian Equities
The market closed bearish for a seventh straight session, led lower by Oil & Gas, Insurance, and Consumer Goods, while Banking bucked the trend and Industrial Goods closed flat. Despite the pullback, sentiment remains resilient given the strong year-to-date performance. Expect continued cautious, choppy trading as profit-taking persists, with selective support from names offering strong earnings and dividend visibility.
Foreign Exchange
The naira traded mixed, depreciating at the official window while appreciating in the parallel market, with the Pound and Euro also weaker at NAFEM. Stability should hold near-term on improving FX liquidity, though persistent demand and the official-parallel gap could limit further gains.
Commodities
Gold rose as a softer dollar and pulled-back Treasury yields ahead of the FOMC’s July minutes, alongside weak retail sales data, reinforced expectations of a Fed hold; safe-haven demand added further support. Brent extended its climb for a fourth straight session as US-Iran talks remained stalled and the temporary truce expired, though gains were tempered by Gulf producers rerouting supply. Gold should stay supported by safe-haven flows and shifting Fed expectations, while oil remains volatile on Hormuz-linked geopolitical risk.
