Money Market

System liquidity improved today, although it remained in the negative territory. Inflows from OMO maturities and FGN bond coupons drove the mild improvement. As a result, the Open Repo Rate (OPR) decreased by 74 bps to 30.46%, and the Overnight Rate (O/N) decreased by 73 bps to 31.00%.

We expect further improvement tomorrow as more coupons hit the system

Treasury Bills

Activity in the treasury bills market was mixed to bullish. There was some selling interest in the mid-tenor papers, while the long end of the curve witnessed lower bids and offers. Consequently, the average mid-rate across the benchmark NTB papers decreased by 10 bps to 19.20%. 

Outlook: We expect the same sentiment to persist tomorrow.

FGN Bonds

The local FGN bond market experienced a slightly bullish trend, with some demand observed for specific bonds (2031s, May 2033s, Feb 2034s, and 2053s). Thus, the average mid-yield decreased by 12bps, settling at 18.27%. 

Outlook: We anticipate more buying interest tomorrow, supported by coupon inflows.

Nigerian Equities

The local stock market started the week positively, with the NGX-ASI increasing by 0.23% to 97,685.64 points. Notable gains in stocks like FLOURMILLS, FBNH, and GEREGU contributed to the market’s performance. Transaction levels also saw an uptick, with a higher volume and value of shares traded. However, three of the five major sectors experienced losses. Market sentiment, as measured by market breadth, remained neutral, with 26 stocks advancing and 26 declining.

Outlook: We expect the same sentiment to persist tomorrow.

Foreign Exchange

The Naira depreciated against the USD at the NAFEM window today, as it lost 7.12%, closing at $/₦1656.49

Outlook: We expect volatility to persist.

Eurobonds

The Eurobonds market stayed strong, particularly for Nigeria, Angola, and Egypt. However, towards the close of the market, buying slowed, and market players took a breather ahead of tomorrow’s FOMC decision. On average, the mid-yield across the Nigerian curve dropped by 22 bps to 9.58%.

Outlook: We expect the market to trade mixed to bullish sentiments.

Commodities

U.S. crude oil traded above $71 per barrel on Tuesday. Optimism is growing that the Federal Reserve will cut interest rates, and production is still disrupted in the Gulf of Mexico. Brent prices increased by 1.12% to $73.87, while WTI prices climbed by 1.45% to $71.54. However, Gold eased slightly after reaching an all-time high in the previous session as the dollar and Treasury yields edged higher. Currently, gold is trading at around $2,591.10 per ounce.

 Outlook: We expect the bullish trend in the oil market to continue, while gold is expected to trade slightly lower.