Risk off sentiment persists in fixed income market
Market commentary
With system liquidity at c.​Amidst continued speculations of a possible rate hike in the next week’s MPC meeting, investors maintained a risk off stance in the T-bills market with yields advancing 36bps on average across all maturities. The most notable advances were recorded on the 15DTM (+73bps), 22DTM(+76bps) and 351DTM(+74bps) bills, closing at 6.25%, 6.55% and 13.84% respectively. Likewise, investors sold off across maturities in the bond market with yields inching up 34bps on average. Particularly, yields on the 15.10% FGN APR 2017 and 12.50% FGN JAN 2026 bonds rose 65bps and 42bps to close at 13.15% and 14.42% respectively.
At today’s T-bills auction, the CBN sold N32.4 billion, N22.8 billion and N55.7 billion on the 91DTM bills, 182DTM and 364DTM clearing at stop rates of 8.10%, 9.20%, and 12.48% (effective yield: 8.27%, 9.64% and 14.25%) respectively. We expect the relatively higher yield levels at the auction coupled with the persistent risk-off investment sentiment to drive T-bills yields higher in tomorrow’s session. We also expect sell offs to persist in the bond market as investors stay cautious.
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