Fixed Income Market Report for 31st of May 2017

The bond market remained inactive with slight bearish sentiments seen at the long end of the yield curve due to profit taking. Total volume traded was below N1billion reflecting the weak appetite for FGN bonds . We expect the market to resume active trading today with some demand expected on the short end of the curve.
 
The Treasury Bills market continued on a bullish run with special emphasis on some short and medium tenured T-bills (June to November 2017 maturities) . The improvement in market liquidity and demand from local investors supported demand for T-bills with attractive yields . Consequently, yields compressed further  by 50bps and 30bps on the short and medium end of the curve, while the long end traded flat.  We expect the market to remain bullish as  naira liquidity . improves today. This should spur some buying interest in the market.
 
The OBB and O/N rates remained stable to close at 11.67% and 12.33% due to the absence of OMO auction and special FX interventions.  Market liquidity is estimated at N2billion positive as at close of business yesterday.  Interest rates are expected to decline further today due to OMO repayment of N64.75Billion, however,  the CBN will be poised to continue their tight stance on liquidity via OMO T-bills issuance and FX interventions.
 
The local unit opened at  NGN310.00/$1  and remained unchanged over the course of the trading session. Rates eventually closed at NGN305.40/$1 as the CBN injected some FX  liquidity in the market.  We expect the CBN to continue to intervene in the interbank market to calm the demand for FX.

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