FIXED INCOME MARKETS

Money Markets

System liquidity started the week positive but decreased during the week, following the OMO auction settlement worth ₦459.60 billion. As a result, the Open Repo Rate (OPR) increased from 18.11% to 31.25%, while the Overnight Rate (O/N) increased from 20.06% to 31.70%, compared to the previous week.

Outlook: We expect system liquidity to stay weak next week, barring any major flows.

Treasury Bills

The treasury bills market experienced a bullish trend this week, driven by a significant decrease in stop rates at the NTB auction. The DMO offered approximately ₦233.31 billion and successfully sold the entire amount, with total subscriptions reaching about 4.84 times the offer size.

Earlier in the week, the Central Bank of Nigeria (CBN) offered ₦500.00 billion but only sold bills worth ₦459.60 billion. The stop rate for the long-dated paper decreased by 7 basis points to 21.80%.

In summary, the average mid-rate decreased by 491 bps week-on-week, settling at 17.98%.

Outlook: We expect anticipate a mixed sentiment next week.

FGN Bonds

Earlier in the week, the local bond market showed a bullish trend. However, as system liquidity decreased, the momentum slowed down with a slight bearish undertone. Nonetheless, the market ended on a bullish note, with the average mid-yield dropping by 97 bps to 17.99% on a week-on-week basis.

Outlook: Next week, we expect the mixed-to-bullish sentiment to persist

Equities

The Nigerian stock market ended the week on a negative note, with the ALL-Share Index declining by 0.15% week-on-week to settle at 96,433.53 points. The year-to-date return was 28.97%, and the market capitalization closed the week at ₦55.39 trillion.

Outlook: We expect similar trajectory next week.

Foreign Exchange

The Naira appreciated against the USD by 0.33% week-on-week, reaching ₦1,593.32/$. 

Outlook: We expect the volatility to persist next week.

Eurobonds

The Eurobonds market trended sideways this week, with a bearish bias evident in the early part of the week.

During the week, the ADP Employment data showed a 99k increase, lower than both the 114k estimate and the 111k reported in the previous month.

In addition, the US Non-Farm Payroll increased by 142k (Est. 164k) in August, after the downwardly revised 89k reported in July. The Unemployment rate also dropped marginally to 4.20% (previous – 4.3%).

Overall, the average mid-yield on the Nigerian curve increased by 25 bps week-on-week to 9.86%.

Outlook: We expect the next hurdle to be the US CPI data next week. Recall, July’s year-on-year inflation increased at 2.90% from 3.00% in June, implying the fourth consecutive drop in inflation.

Commodities

This week, crude oil prices dropped due to the decision by OPEC+ to delay a production increase, which did not alleviate concerns about supply surpassing demand. Brent oil fell by 6.83% to $73.42 per barrel, while WTI decreased by 4.84% to $69.99 per barrel. In addition, the price of gold rose by 0.45% to $2,538.70 per ounce.

Outlook: We expect a mixed trend next week.