Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide

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The FGN bond space started on a quite interesting note as actions from profit-takers gingered slight action especially at the tail of the curve. The day kicked off with better offers for the 2035 and 2050s papers which were matched with available bids in the market.

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

The 2035s opened the day with it trades settling around 8.90% and then gradually increasing to 8.95% levels. By mid-day, we saw trading activities slowed, with more offers shown, and bids becoming less aggressive, making it difficult to close trades while quotes stayed stuck at 9.05%/8.95%.

The 2049s and 2050s weren’t left out in the market actions today with most of its trades settling around 9.70% levels. Subsequently, yield compressed by an average of c.6bps D/D across the benchmark curve.

We expect the market trades to continue in this tides with more actions from profit-takers especially at the tail of the curve.

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

Treasury Bills

The OMO bills space continued in its slow tides largely bided with poor offers making it difficult to seal trades. Most of the market bids were for March- June bills with no offer to show for trade. The few offers seen were for December and January bills albeit better than yesterday’s levels but still far from the bulls expectations who were resisting picking these bills at the mid of 3% level. Consequently, yields dropped further by an average of c.14bps D/D.

The NTB space saw a bit of action in retail sizes at the belly of the curve which settled around 1.90%, however, yields stayed flattish across the NTB curve.

For tomorrow, we expect the OMO space to coast around these levels except the APEX intervene with a possible OMO auction to ease the market. While at the NTB space, we expected a bit of calmness as attention shifts to the PMA auction and its possible outcomes.

Read Also:  Summary of FGN Bond Auction Results For May 2019

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

Money Markets

The interbank system liquidity stayed adequately buoyant opening the day at c.N746.01BN although we saw a slight uptick in OBB and OVN rates albeit less significant with its rates closing at 1.33% and 2.00% respectively.

With no significant funding need tomorrow, we expect rates to hover around this level during tomorrow’s trading session.

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

FX Market

The FX market stayed very quiet for the most part of the trading session with rates staying unchanged across the different market segments except at the IEFX market where the Naira appreciated slightly by 0.25k closing the day at N389.50/$ albeit banks are still largely bided in that space.

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

Eurobonds

The NGERIA Sovereign tickers traded on a discreet note, although largely bullish across the curve with the market gaining most of its action on the 2025 paper. We also saw slight interest for few longer-dated papers although in small sizes as such yields compressed by an average of c.7bps across the sovereign curve.

The NGERIA Corps tickers traded on a quiet session also as the only movement seen was on Zenith 2022s and FIDBAN 2022s which strengthened by c.4bps apiece.

Heavy Market Liquidity Continues To Drive OMO Rates Down The Tide - Brand Spur

Zedcrest Capital