FIXED INCOME MARKETS
Money Markets
Despite the two consecutive OMO auctions with a total auction debit of ₦1.63 trillion, system liquidity maintained a significantly positive balance. As a result, the Open Repo Rate (OPR) and the Overnight Rate (O/N) decreased by 767 bps and 611 bps to 18.11% and 20.06% respectively, compared to the previous week, this was also supported by the major change by the CBN on the operationalization of the Standing Lending Facility (SLF) and Standard Deposit Facility.
Outlook: We expect system liquidity to gradually diminish next week, in the absence of any major flows.
Treasury Bills
The treasury bills market trended bullish this week, supported by improved system liquidity from residual FAAC credits and partially by the two consecutive marginal declines in OMO bills stop rates.
At the first OMO auction, the CBN sold ₦869.46 billion, with the stop rate on the 1-year paper at 21.89%. Thereafter, the CBN sold ₦758.00 billion, with a stop rate on the 1-year paper at 21.87%.
Overall, the average mid-rate declined by 134 bps week-on-week, settling at 18.47%.
Outlook: We expect a cautious trading next week, as market anticipate the NTB auction, where the DMO would be offering ₦233.31 billion.
FGN Bonds
This week, the local bonds market maintained a bullish posture across several papers, particularly on the May 2033, Feb 2034 and 2053 maturities. Consequently, the average mid-yield decreased by 43 bps to 18.96% on a week-on-week basis.
Outlook: We anticipate a mixed to bullish bias next week.
Equities
The Nigerian stock market ended the week on a positive note, with the ALL-Share Index rising by 0.63% week-on-week to settle at 96,579.54 points, up from 95,973.45 points the previous week. The year-to-date return was 29.16%, and the market capitalization closed the week at ₦55.48 trillion.
Outlook: We expect similar trajectory next week
Foreign Exchange
The Naira depreciated against the USD by 1.81% week-on-week, reaching ₦1,598.56/$.
Outlook: We expect market to trade within ₦1500-1600 levels next week.
Eurobonds
The Eurobonds market experienced lower volatility and fewer surprises this week, with minimal impact from economic data such as the US Jobless Claims, GDP growth rate, and US PCE Price Index. Consequently, the average mid-yield on the Nigerian curve decreased by 29 bps week-on-week to 9.94%.
Outlook: Next week, we expect players to position ahead of the US ADP Employment data and Non-Farm Payroll
Commodities
At the start of the week, crude oil prices soared due to reports of production stoppages in Libya. However, as more information became available about the actual impact on production, the prices began to stabilize. Brent oil decreased by 0.28% to $78.80 per barrel, while WTI declined by 1.26% to $73.89 per barrel. Additionally, the price of gold dropped by 0.02% to $2,545.70 per ounce.
Outlook: We expect a mixed trend next week.
