Coronation Fixed Income and Exchange Rate Update

Image Credit: UBA Plc

December 8, 2021/Coronation Research

Summary

  • Opening market liquidity was reported at N105.8bn on Friday (03 December ‘21). Overnight and repo rates closed within a range of 14.5-15.8%. Last week, the average NTB yield declined by -35bps w/w to close at 4.5%. This can be attributed to increased demand mainly from fund managers. Meanwhile, the average yield for OMO bills declined by -2bps w/w to close at 5.5%. At Thursday’s primary market OMO auction, the CBN allotted N37.0bn worth of OMO bills across all three tenors and the stop rates remained unchanged from the previous auction (103-day: 7.0%, 180-day: 8.5%, 348-day: 10.1%).
  • As for the secondary market for FGN bonds, the average yield declined by 1bp w/w to close at 11.4%.
  • According to Eurostat, Eurozone inflation rose to 4.9% y/y in November ’21 compared with 4.1% y/y recorded in October ’21. Inflationary pressure was significant in the cost of energy (27.4% y/y), services (2.7% y/y), non-energy industrial goods (2.4% y/y), as well as food, alcohol & tobacco (2.2% y/y). On a month-on-month basis, inflation rose by 0.5% in November compared with 0.8% recorded in the previous month.
  • According to the US Department of Labour, the US nonfarm payroll rose by a total of 210,000 in November compared with 531,000 recorded in October. The unemployment rate declined to 4.2% compared with 4.6% recorded in October. This was driven by increased employment in professional and business services, transportation and warehousing, construction, as well as manufacturing.

For the full Coronation fixed income and exchange rate (CFEX) update, please click here.

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