Nigeria_Fixed Income Daily: Bearish trading on Bills as Inflation hits 18.5%
- Market commentary
§The National Bureau of Statistics released data on November Consumer Price Index, showing a rise in inflation to 18.5% (October: 18.3%). Meanwhile, the CBN conducted an OMO auction in today’s session offering N50 billion apiece on the 175DTM and 357DTM bills. The apex bank eventually sold N43 billion on the 357DTM bill at a stop rate of 18.6% (effective yield: 22.74%) with no sale on the 175DTM bill. Amidst this, Interbank Call rate advanced 42bps to 3.42%. At the FX interbank market, the naira held at N305.00 and N349.00 against the dollar at the spot market and one year forward rate respectively.
§Following the liquidity mop up, the T-bills market turned slightly bearish with yields rising 5bps on average. Sell pressure was weighted at the short end of the space with yields on the 49DTM (+78bps), 84DTM (+146bps), and 91DTM (+74bps) bills advancing to 14.91%, 15.34%, and 14.82% respectively. Meanwhile, the bond market traded relatively bullish as yields on benchmark bonds moderated 7bps on average. Notably, yields on the 14.20% FGN MAR 2024 and 12.1493% FGN JUL 2034 bonds declined 21bps and 17bps to 15.37% and 15.49% respectively.
§ We noticed a slight bearish reaction in the T-bills market to today’s inflation data and we anticipate further upward adjustment in yields at week close.
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