Saturday, February 08, 2020 / 02:30PM / By ARM Research /Header Image Credit: ARM
Trade figures for the US revealed its trade deficit rose by 11.89% MoM to $48.9 billion in December 2019. This was driven by a faster increase in imports (+2.7%) compared to the growth in exports (+0.8%). For FY 2019, the trade deficit was down by 1.7% YoY to $616.8 billion - an offshoot of a faster decline in imports (-0.4% YoY) relative to exports (-0.1% YoY) . Albeit, its goods deficit with China fell 17.6% to $345.6 billion, its smallest level since 2014. Elsewhere, China announced it would halve tariffs on hundreds of US good worth about $75billion be-ginning February 14. These tariffs were initially imposed on Sept.1 2019 and covered products such as US crude oil, LNG, pork and soybeans. These cuts signify China's efforts to imple-ment the recently signed phase 1 trade deal. On global politics, President Trump was acquitted by the Senate in his impeachment trial thus ending a bid to remove him from office.
PMI data for the month of January 2020 was released by the CBN. Although it printed above the 50pts benchmark, the manufacturing and non-manufacturing PMI slowed by 1.6pts and 2.5pts to 59.2pts and 59.6pts respectively relative to the prior month. This was due to a moderation across all subsectors, signalling a slowdown in the level of business activities compared to the previous month. Elsewhere, the Ministry of Finance reported that the federal government has gotten an approval of $6 billion out of ~$30 billion loan which the FG intends to channel towards infrastructure projects. Shedding more light on the $30 billion loan program, about $17 billion would be sourced from the China-Exim bank while the balance would be funded from other lending institutions such as the Islamic Development Bank.
The Nigerian bourse witnessed a steep decline as the ASI closed -2.69% WoW, while market capitalization lost N239 billion to close at N14.62 trillion. All sectors closed in red, save the in-surance sector (+0.15%). The decline was anchored by the Breweries (-5.62%), Cement (-4.94%), Banking (-2.26%), Oil & Gas (-5.74%), and Telecom (-1.48%) sectors. On stock perfor-mance, FBNH (-8.40%), ZENITH (-5.04%), NB (-6.36%), INTBREW (-5.56%), DANGCEM (-5.50%), BUACEMENT (-4.32%) and MTNN (-2.17%) yielded negative returns amongst other stocks.
Average bond yields witnessed its first WoW rise of the year, closing 15bps higher at 6.83%. This mirrored increases at both ends of the curve with NTB yields up 13bps to 3.86% and bond yields up 17bps to 9.79%. The biggest increases in bond yields were seen in the Feb-2020 (+185bps), Jul-2021 (+27bps) and Apr-2023 (+25bps). In the NTB space, the increases were ob-served across the short-tenor bills (35bps) and long-tenor bills (34bps). At the OMO auction this week, the CBN sold N128.2 billion worth of OMO bills, matching the total amount sub-scribed. However, this was less than the N150 billion offered and the N311.54 billion worth of bills maturing in the same day. The 1yr stop rate declined 4bps to 13.05%.
Take-Away For The Week
Monthly Foreign Currency flows through the IEW ($'billion)
This week, we feature the monthly foreign currency flows through the Investors and Exporters Window (IEW). Movement of FX flows at the IEW took a different turn over the first month of the year. To buttress, after six consecutive months of net outflow at the window, balance of flows printed at a net inflow of $561 million in January 2020.
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