(Greenwich Merchant Bank): In a four-day trading week, activities in the Fixed Income market remained bearish from the prior week to settle the average yield across the market at 2.28% from 2.07% WoW. Investors continued booking profit in the Bond and OMO-bill markets while the NT-bill market closed marginally positive.
While investors sold off holdings at the belly of the curve, persistent bids at the head and tail of the curve spurred the NT-bill market into the light. Thereby, the average yield in the NT-bill market plunged by 2bps WoW to settle at 0.38% from 0.40%.
On the flip side, the OMO-bill market was largely a sellers’ market following chunk of offers across the curve save for the 16 FEB 2021, 16 MAR 2021 and 30 MAR 2021 papers. Consequently, the average yield in the OMO-bill market spiked by 8bps to 0.54% from 0.47%.
With the system buoyed with an estimated NGN750bn in liquidity, Money Market rates softened further into single digits, bolstered by inflows from maturing OMO-bills with no offsetting outflows. Thus, the Overnight and Open Buy Back rates closed at 0.58% and 0.43% from 4.5% and 4.5% respectively in the prior week.
Investors continue to book profit in the Bond Market all through the week, as investors sold off positions in order to close their books on a high note as the year wraps up. Consequently, the average bond yield steeped northwards by 56bps to 5.91% from 5.34% at the close of trading in the prior week.
In the FX market, the Naira strengthened at the Parallel market following increased supply from remittances in light of policy reforms recently announced by the Apex Bank. The Naira closed at NGN465.0/USD from NGN477.0/USD in the prior week.
Further afield, turnover eased by 7.0% WoW in the Investors & Exporters Window (I&EW) to a weekly average of USD145.2mn vs USD157.2mn in the prior week. While the Naira strengthened in the I&E Window to close at NGN392.0/USD vs NGN394.0/USD in the prior week.
Forging ahead to the new week, we expect the market to remain lukewarm and investors will remain averse as market players begin to close their trading books for the year.