Yield on U.S. treasury bonds declined today, on rise in investors’ interest after the U.S. Federal Reserve Bank (Fed) Chairman maintained the Fed’s dovish monetary stance before the U.S. Senate, further re-iterating the possibility of not reducing its ca $3.8 trillion government treasury balance sheet as previous planned. This comes as data released by the U.S. Commerce Department indicated housing construction starts dropped 11.2% in December, its lowest in 2years, as the 10yr, 5yr and 2yr U.S. Treasury bonds declined to ca +2.645%, +2.452% and +2.488%, respectively.
With expectation of slower GDP growth in the U.S. for Q4 2018, to be released on 28 February and uncertainties of agreed terms of current U.S./China trade negotiations, we expect continued investors’ uncertainties to increase global financial markets volatility for the remainder of Q1 2019.
Liquidity in the banking system opened on a positive note today, at ca ₦114.64bn. There was no Open Market Operation (OMO) auction conducted by the Central Bank of Nigeria (CBN) today.
A very active trading day in the treasury bills secondary market today, with continued demand seen across the curve, on the absence of Open Market Operation (OMO) auction and expectation of lower stop rates at tomorrow’s primary market auction. Average rates dropped ca -28bps day-on-day, with the 29 August maturity trading the most to close at 12.55% from 13.05%. There will be a Primary Market Auction (PMA) tomorrow with ca ₦115.118bn been rolled-over. Please find below our expectation of stop rates at the auction:
|S/N||AUCTION DATE||TENOR||OFFER AMOUNT (NGN)||LAST STOP RATE||EXPECTED STOP RATE RANGE|
|1||27-Feb-19||91-Day||24,372,000,000.00||10.97%||10.75% – 11.00%|
|2||27-Feb-19||182-Day||38,751,000,000.00||13.40%||12.80% – 13.05%|
|3||27-Feb-19||364-Day||51,995,000,000.00||14.95%||14.65% – 14.90%|
Open Buy Back (OBB) and Overnight (O/N) rates dropped day-on-day to 13.79% and 14.71% from 17.64% and 18.79%. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.
The bonds secondary market continues to see buying interest, with demand seen across the curve today, particularly on the March 2036 maturity, which traded the most to close at 14.38% from 14.57%. Average yield dropped ca -5bps day-on-day.
The Nigerian equities market declined today, with the Nigerian Stock Exchange All Share Index (NSE ASI) losing ca -0.69% day-on-day to close at 32,473.82pts, with market’s year-to-date returns at +3.32%. This was largely due to price gains in Nestle Nigeria Plc (-4.43%), Guaranty Trust Bank Plc (-0.13%) and Zenith Bank Plc (-0.77%).
The NSE Consumer Goods and Banking indices lost ca -157bps and -118bps respectively while Industrial and Oil & Gas indices gained ca +4bps and +156bps. respectively. Sunu Assurances Nigeria Plc led the volume and with 50.81m units and Guaranty Trust Bank Plc led the value chart with ₦677.66mn.
The Naira remained stable against the dollar at the interbank market window today, at ₦306.85/$1. In the parallel market, it remained stable against the Dollar, Pound Sterling and Euro at ₦360/$1, ₦470/₤1 and ₦408/€1 day-on-day, respectively. The Naira appreciated at the Nigerian Autonomous Foreign Exchange (NAFEX) window at ₦361.46/$1 from ₦361.56/$1.
Crude oil prices rose today, on continued optimism that output-cut by the Organisation of Petroleum Exporting Countries (OPEC) would continue to support crude oil prices. Brent crude oil price gained ca +1.08% at $65.46pb, while WTI crude gained ca +0.70% at $55.87pb, as at report time. Spot gold rose ca -0.16% day-on-day at $1,327.40 per ounce.
|AIICO Money Market Fund (AMMF)|
|Net Yield (As at current date)||13.28% per annum|
|Added Benefit||Personal accident insurance cover|
|AIICO Capital Guaranteed Income Note (GIN) Rates p.a.|
|Amount (NGN)||30 Days||60 Days||90 Days||180 Days||364 Days|
|10,000,001 – 50,000,000||10.00||10.50||11.00||12.00||13.00|
|50,000,001 – 100,000,000||11.00||11.25||11.50||12.50||14.00|
|100,000,001 – 400,000,000||12.00||12.25||12.50||13.00||14.50|
|Trading Treasury Bills Rates p.a.|
|Maturity Dates||Tenor (Days)||Discount Rate||Effective Yield|
|Select Macro-economic Indices|
|Inflation % (January 2019)||11.37 (-0.61% ytd)|
|PMI (January 2019)||58.50|
|MPR (%)||14 (-5%/+2% around mid-point)|
|Brent Crude Price US$ pbbl||65.46 (+1.08% d/d)|
|External Reserve (US$’billion)||42.53 (-1.36% ytd)|
|GDP % (Q4 2018)||+2.38% (Q3 2018: +1.81% y/y)|
|NSE All Share Index (ASI)||32,473.82 (-0.69% d/d; +3.32% ytd|
|Market Capitalisation (₦’Trillion)||12.11|