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Breakfast report 22 November

• Headline inflation declined to 15.99% y/y in the recently released inflation report by the National Bureau of Statistics. The outturn was 64 basis points lower and was supported primarily by the harvest season. While food disinflation was also driven by harvest yields, unstable core inflation dropped by 50bps due to increased FX liquidity. Although the inflation results seem favourable, base effects continue to obscure market realities as prices surge and purchasing power remains constricted. Overall, we saw inflation fall for the seventh consecutive month, and we expect this trend to continue in the coming months on the back of still strong base effects and the continued retention of fuel subsidies.
• Equity: We expect a mixed market at the start of the new week as investors continue to cherry pick attractive counters across board, whist still taking profits on previously rallied stocks
• Fixed Income: In the next session, we expect bullish sentiment to play out in the bonds market, as players continue to react to the rate uptick at the last auction, while we foresee tepid trading in the NTB and OMO spaces, as the upcoming NTB auction takes centre stage.