Financial Markets Today
Yields on global treasuries in Developed Economies (DMs) declined significantly today, dropping to their lowest in more than 2years, with the German 10yr treasury crashing to its lowest in history at -0.32% and the U.S. 10yr treasury declining to its lowest since September 2017 at +2.025%. This came off the back of deepened dovish comments by the European Central Bank (ECB)’s President – Mario Draghi, of the possible rate cuts and quantitative easing (QE) by the ECB should economic growth deteriorate further in the Eurozone and inflation remain below its 2% target.
With high expectation for the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve Bank to maintain its key benchmark interest at 2.25% – 2.50%, we expect investors to be remain keen on softer monetary policy comments by the FOMC chairman at the end of its 2-day policy meeting tomorrow.
MONEY MARKETS
CAPITAL MARKETS
FOREIGN EXCHANGE
COMMODITIES
Banking system liquidity opened positive today with ca ₦216.80bn with no major funding need by the banks. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.
Treasury Bills
The treasury bills secondary market continued on a bullish note today, with interbank liquidity remaining positive. There was demand on short-dated maturities, as average rates marginally shed ca -2bps day-on-day, with market focus shifting to tomorrows primary market auction. Kindly find below our expectations:
| S/N | AUCTION DATE | TENOR | AMOUNT OFFERED (NGN) |
LAST STOP RATE | EXPECTED STOP RATE RANGE |
| 1 | 19-Jun-19 | 91-Day | 3,000,000,000.00 | 10.00% | 9.75%-10.00% |
| 2 | 19-Jun-19 | 182-Day | 4,000,000,000.00 | 11.9499% | 11.75%-12.00% |
| 3 | 19-Jun-19 | 364-Day | 10,614,000,000.00 | 12.34% | 11.90%-12.15% |
Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 7.21% and 7.71% from 8.86% and 9.43%. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
Bonds
Investors’ showed some appetite for bonds in the secondary market today, with demand on mid-to-long dated maturities. Average yields shed ca -3bps day-on-day, with the February 2028 maturity closing at 14.55% from 14.62%.
Eurobond
Bullish sentiments persisted in the nation’s Eurobonds market today, with yields dropping across the curve. This can be attributed to reports of a call conversation between U.S. President – Donald Trump and Chinese Premier – Chinese Premier – Xi Jinping on possible resumption of trade negotiations as well as the news that the Federal Government of Nigeria will not be floating new/additional Eurobonds this year. Average yields shed ca -13bps day-on-day, with the January 2049 maturity closing at 8.54% from 8.68%.
Equities
The Nigerian equities market continued on a negative note today, with the Nigerian Stock Exchange All Share Index (NSE ASI) marginally shedding ca -0.39% day-on-day to close at 29,818.80pts, and market’s year-to-date returns at -5.13%. This was largely due to losses in MTN Nigeria Plc (-0.75%), Guaranty Trust Bank Plc (-0.32%) and Dangote Cement Plc (-0.16%).
The NSE Banking, Industrial and Oil & Gas indices gained ca +32bps, +4bps and +47bps respectively, while the Consumer goods index shed ca -122bps. Wema Bank Plc led the volume chart with ca 2.39bn while Zenith Bank Plc value charts with ca ₦8.2bn.
The Naira remained flat against the dollar in the interbank market at ₦306.95/$1, but weakened in the parallel market at ₦362/$1 from ₦361/$1. It also weakened against the Pound sterling and Euro at ₦463/₤1 and ₦405/€1 from ₦462/₤1 and ₦402/€1 respectively, in the parallel market. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦360.34/$1 from ₦360.32/$1.
Crude oil prices reversed earlier losses today, with Brent crude oil price gaining ca +2.13% day-on-day at $62.24pb, after U.S. President – Donald Trump disclosed he had a phone call with the Chinese Premier – Xi Jinping, and a planned meeting at the forth-coming G-20 meeting, in a potential resumption of trade negotiations. WTI gained ca +3.76% day-on-day at $53.88pb, as at report time. Spot gold shed ca +0.5659% at $1,350.50 per ounce.
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| Benchmark T-Bills Discount Rates | ||||
| 18-Jun-19 | 17-Jun-19 | Change in Rates | ||
| 86 Days . | 10.67% | 10.67% | 0.00% | |
| 177 Days- | 11.61% | 11.59% | 0.02% | |
| 359 Days. | 12.34% | 12.34% | 0.00% | |
| Source: FMDQ DQL for 18 June 2019 | ||||
| Benchmark FGN Bond Yields | ||||
| 18-Jun-19 | 17-Jun-19 | Change in Yield | ||
| 3 yrs: 16.00% 15-Jul-2021 | 14.82% | 14.87% | -0.05% | |
| 5 yrs: 15.54% 27-Apr 2023 | 14.37% | 14.37% | 0.00% | |
| 10 yrs: 13.98% 23-Feb 2028 | 14.55% | 14.62% | -0.07% | |
| 20 yrs: 16.25% 18-Apr 2037 . | 14.77% | 14.77% | 0.00% | |
| Source: FMDQ DQL for 18 June 2019 | ||||
| Benchmark FGN EuroBond Yields | ||||
| 18-Jun-19 | 17-Jun-19 | Change in Yield | ||
| 3 yrs: NGERIA 6 3/4 01/28/21 | 4.53% | 4.70% | -0.17% | |
| 5 yrs: NGERIA 6 3/8 07/12/23 | 5.38% | 5.50% | -0.12% | |
| 10 yrs: NGERIA 6 1/2 11/28/27 | 7.08% | 7.22% | -0.14% | |
| 20 yrs: NGERIA 7.696 02/23/38 | 8.01% | 8.16% | -0.15% | |
| 30 yrs: NGERIA 9.248 01/21/49 | 8.54% | 8.68% | -0.14% | |
| Source: FMDQ DQL for 18 June 2019 | ||||
| AIICO Money Market Fund (AMMF) | |
| Net Yield (As at current date) | 13.18% per annum |
| Added Benefit | Personal accident insurance cover |
| AIICO Capital Guaranteed Income Note (GIN) Rates p.a. | |||||
| Amount (NGN) | 30 Days | 60 Days | 90 Days | 180 Days | 364 Days |
| 10,000,001 – 50,000,000 | 10.00 | 10.50 | 11.00 | 12.00 | 13.00 |
| 50,000,001 – 100,000,000 | 11.00 | 11.25 | 11.50 | 12.50 | 14.00 |
| 100,000,001 – 400,000,000 | 12.00 | 12.25 | 12.50 | 13.00 | 14.50 |
| Trading Treasury Bills Rates p.a. | |||
| Maturity Dates | Tenor (Days) | Discount Rate | Effective Yield |
| 01-Aug-19 | 44 | 4.75% | 4.78% |
| 17-Oct-19 | 121 | 11.10% | 11.52% |
| 07-Nov-19 | 142 | 11.30% | 11.82% |
| 16-Jan-20 | 212 | 11.80% | 12.67% |
| Select Macro-economic Indices | |
| Inflation % (May 2019) | 11.40 (+0.26% ytd) |
| PMI (May 2019) | 57.80 |
| MPR (%) | 13.5 (-5%/+2% around mid-point) |
| CRR (%) | 22.5 |
| Brent Crude Price US$ pbbl | 62.24 (+2.13% d/d) |
| External Reserve (US$’billion) | 45.118 (+1.48% ytd) |
| GDP % (Q1 2019) | +2.01% (Q4 2018: +2.38% y/y) |
| NSE All Share Index (ASI) | 29,818.80 (-0.39% d/d; -5.13% ytd) |
| Market Capitalisation (₦’Trillion) | 13.14 |
Financial Markets Update – 18 June 2019
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