Treasury Market Opens Bearish as Market Players React to Higher CBN OMO Rate

Proshare

Monday, September 02, 2019 05:30PM / Zedcrest Capital / Header Image Credit: Money Marketing

 

The T-bills market traded on a bearish note today, with yields trending higher by c.30bps on the day. We witnessed the most selling interests on the Short end of the curve, following a further liquidity squeeze from a Wholesale FX sale by the CBN.

 

Below are highlights of trading activities in the fixed income and forex market today.

 

Bonds

The FGN Bond market opened the month on a firmly bearish note, with yields trending higher by c.14bps, as market players reacted to the hike in the 1yr OMO rate by the CBN to 13.50% (15.60% yield), which weakened bid prices further, especially on the short end of the curve.

 

We expect sentiments to remain weak within the bond market due to expectations for a further uptrend in short term rates.

 

Benchmark FGN Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

14.50 15-Jul-21

14.56

13.90

0.28

16.39 27-Jan-22

14.58

14.09

0.24

12.75 27-Apr-23

14.62

14.50

0.32

14.20 14-Mar-24

14.35

13.89

0.15

13.53 23-Mar-25

14.38

13.79

0.17

12.50 22-Jan-26

14.41

14.07

0.11

16.29 17-Mar-27

14.31

14.14

0.11

13.98 23-Feb-28

14.35

14.13

0.05

12.15 18-Jul-34

14.70

14.40

0.05

12.40 18-Mar-36

14.73

14.40

0.06

16.2499 18-Apr-37

14.74

14.39

0.10

14.80 26-Apr-49

14.73

14.50

0.06


Source: Zedcrest Dealing Desk
 

 

Treasury Bills

The T-bills market traded on a bearish note, with yields trending higher by c.30bps on the day. We expect yields to remain pressured across the curve, as market players anticipate a renewed OMO auction by the CBN later in the week.

 

Benchmark Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

12-Sep-19

13.50

12.75

0.15

3-Oct-19

13.25

12.75

0.15

14-Nov-19

13.50

12.50

0.50

5-Dec-19

13.75

12.60

0.75

2-Jan-20

13.85

13.50

0.35

6-Feb-20

13.90

13.40

0.50

19-Mar-20

14.00

13.50

0.20

2-Apr-20

13.95

13.30

0.25

14-May-20

14.00

13.25

0.35

04-Jun-20

13.95

12.80

0.20

02-Jul-20

13.95

12.80

0.25

13-Aug-20

14.00

13.00

0.25

Source: Zedcrest Dealing Desk

 

Money Market

Rates in the money market remained relatively stable as system liquidity was sustained in positive territory at c.N80bn est. The OBB and OVN rates consequently ended the session at 8.86% and 9.86% respectively.

 

We expect rates to remain relatively stable tomorrow, as there are no significant funding pressures anticipated.

 

Money Market Rates

 

Current (%)

Previous (%)

Open Buy Back (OBB)

8.86

9.29

Overnight (O/N)

9.86

10.50

Source: FMDQ, Zedcrest 

 

FX Market

At the interbank, the Naira/USD spot rate appreciated by 5k to N306.95/$, while the SMIS rate remained stable at N358.04/$. The Naira appreciated at the I&E window by 20k to close at N362.73/$. At the parallel market, the cash and transfer rates appreciated to N357.70/$ and N362.50/$ respectively.

 

 

FX Market

 

Current (N/$)

Previous  

(N/$)

CBN Spot

306.95

307.00

CBN SMIS

358.04

358.04

I&E FX Window

362.73

362.93

Cash Market

357.70

359.00

Transfer Market

362.50

363.00

Source: CBN, FMDQ, REXEL BDC

 

 

Eurobonds

The NGERIA Sovereigns traded on a relatively flat note, with yields marginally lower by 1bp on the day.

 

In the NGERIA corps, we witnessed some buying interest in the UBANL 22 and ETINL 24.

 

Proshare Nigeria Pvt. Ltd.

 

 

Proshare Nigeria Pvt. Ltd.

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Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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