FIXED INCOME MARKETS
Money Markets

System liquidity maintained a positive balance throughout the week, supported by some government-related disbursements. Hence, the Open Repo Rate (OPR) and the Overnight Rate (O/N) decreased by 52bps and 60bps to 25.61% and 26.06% respectively, compared to the previous week.

Outlook: Next week, OMO maturities worth ₦80.00 billion is expected to add to system liquidity. Although, we expect liquidity to remain positive pending any significant outflows.

Treasury Bills

The treasury bills market trended sideways this week, with mixed sentiments across the curve.

During the week, the CBN offered OMO bills worth ₦150.00 billion but had “no sale” given the low participation with only ₦86.50 billion in subscription.

Overall, the average mid-rate rose by 56 bps week-on-week to reach 22.26%.

Outlook: Next week, the DMO would be offering treasury bills worth ₦216.09 billion.

FGN Bonds

The FGN local bond market saw mixed to bearish sentiments this week, with most of the activity skewed to the New 2029, 2031, 2033, 2038, 2050, and 2053 papers. As a result, the average mid-yield increased by 7 bps to 19.63% week-on-week.

Outlook: We expect sentiment to remain mixed next week.

Equities

The Nigerian stock market concluded the week on a bearish note, as the ALL-Share Index declined by 0.46% week-on-week, reaching a closing figure of 97,745.73 points. The year-to-date return stood at 30.72%, and the market capitalization closed the week at ₦55.47 trillion.

Outlook: The bearish sentiment could persist next week as market participants react to the disappointing Q2 2024 earnings results.

Foreign Exchange

Naira depreciated against the USD by 0.48% week-on-week, to $/₦1,617.08.

Outlook: We expect volatility to persist next week.

Eurobonds

Despite the bearish posture in the Eurobonds market, we noticed some occasional cherry-picking activities on selected maturities. The takeaway this week was the FOMC meeting and US Non-farm payroll.

The Fed’s maintained interest rate at 5.50% and indicated a likely rate cut in September meeting, subject to unfolding economic data.

The US Non-farm payroll for July declined dramatically to 114k, down from the downwardly revised 179k jobs added in June and lower than 176k market estimate. Also, unemployment rate increased to 4.30% in July, surpassing 4.10% in both estimate and preceding data.

At the close of the week, the Nigerian Eurobond curve experienced a bearish trend due to the prevailing negative sentiments related to the ongoing protests in the country. In general, the average mid-yield rose by 35 bps to reach 10.34%.

Outlook: We expect a mixed-to-bullish bias next week.

Commodities

Despite the escalating tensions in the Middle East and efforts to maintain oil output, crude oil prices plummeted this week. The drop was largely influenced by a decrease in China’s activity index, the Fed’s decision, and cooling US job data.

At the OPEC+ meeting held August 1st, members agreed to continue with oil output cut, maintain a 2.2 million bpd voluntary cut until September.

Brent oil decreased by 5.30% to $76.83 per barrel, while WTI dropped by 6.26% to $77.23 per barrel. In contrast, the price of gold rose by 3.94% to $2,474.90 per ounce.

OutlookWe expect a mixed trend next week.

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