Treasury Yield Steadies as Fixed Income Market Swings Lower
Treasury bills yield steadies on Monday as the fixed income market investors’ mood swing on the cold side amidst projection for a possible decline in rates. In the primary market auction, the stop rate for the 364-day Treasury bill decline following a robust subscription level.
There will be limited upside yield repricing this week, according to analysts polled by MarketForces Africa, citing that there is a low market’s catalyst but scarce surprises cannot be entirely ruled out.
The slowdown in inflation worries, albeit steep, has continued to impacting trading activities in the fixed income space, and this would likely worsen on the expectation of inflow from maturing Treasury and Open Market Operations Bill this week.
The absence of liquidity pressure resulted in moderation in interbank rates on Monday. Data from FMDQ shows that the overnight lending rate contracted by 633 basis points to 17.5% while open buyback declines 583 basis points to 17.5.
In the secondary market last week, the average fixed income yield ended the week 8 basis points lower at 7.86%, reflecting further moderations in bond yields, according to analysts at ARM Securities.
Specifically, buying interest was directed towards the Mar-2027 which shed 77 basis points, Mar-2024 bumps 39 basis points and there was 35 basis point decline in Feb-2028 maturities, and this, in turn, led the average bond yield down 17 basis points to settle at 11.04%.
Meanwhile, analysts spotted that the average Nigerian Treasury Bills yield inched up 2 basis points to settle at 4.69% following a 33 basis points rise in the 182-day bill.
In a market report, Cordros Capital said trading at the Nigerian Treasury Bills secondary market was quiet as the average yield stayed at 4.7%. Similarly, following the CBN low issuance in the segment, the average yield at the open market operations space was flattish at 6.0%.
Also, the Federal Government bond secondary market ended the day on a bullish note as average yield sloped downward by 6 basis points to 11.3%. Across the benchmark curve, the average yield expanded at the short (+1bp) end due to the selloff of the JAN-2022 bond.
Read Also: Treasury Yield Steadies as Fixed Income Market Keeps Low Rates
Conversely, analysts said the average yield tumbled at the mid (-10bps) and long (-9bps) segments following demand for the JUL-2030 (-20bps) and JUL-2034 (-43bps) bonds, respectively.
Treasury Yield Steadies as Fixed Income Market Swings Lower
