Treasury, OMO Bills Trade Quiet as Inflation Fears Rise
Though average yield on the Federal Government of Nigeria (FGN) bond dipped three basis points in the secondary market, Treasury and open market operations bills were steady as inflation pressures rise.
National Bureau of Statistics (NBS) consumer price index report shows that there was an increase of 0.23 per cent in the headline inflation rate to 15.63 per cent in December from 15.40 per cent recorded in November 2021.
The core inflation, which excludes volatile agricultural produce prices, stood at 13.87 per cent in December 2021, up by 0.02 per cent compared to 13.85 per cent in November 2021.
The composite food index rose by 17.37 per cent year-on-year in December 2021 compared to 17.21 per cent year-on-year in November 2021, according to NBS.
In the money market, short term rates adjusted upward due to liquidity strain in the financial system. The average interbank rate inched higher 50 basis points to 14.88% on Monday following an increase in open buy back and overnight lending rates.
Data from FMDQ Exchange shows that the overnight lending rate increased by basis points or 0.50 per cent to close at 15.25 per cent as against the last close of 14.75 per cent.
Also, the Open Repo rate also increased by 50 basis points to close at 14.50 per cent compared to 14.00 per cent on the previous day. In the secondary market, trading activities on Nigerian Treasury bills closed on a flat note with average yield across the curve remaining unchanged at 4.54 per cent, Alpha Morgan Capital said in a note.
Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.50 per cent, 4.11 per cent, and 5.21 per cent, respectively, according to FSDH Capital note.
Read Also: Yield Rises Moderate as Nigerian T-Bills Trades Quiet
In their separate market notes, analysts said the average yield on OMO bills across the curve closed flat at 5.62 per cent. It was however noted that average yields across short-term and long-term maturities remained unchanged at 5.52 per cent and 5.71 per cent, respectively.
FGN bonds traded bullish in the secondary market today as the average bond yield across the curve cleared three basis points lower, close at 11.80 per cent from 11.83 per cent on the previous day.
FSDH Capital note revealed that average yields across short tenor, medium tenor, and long tenor of the curve decreased by 2 basis points, a basis point, and 4 basis points, respectively.
The 23-FEB-2028 maturity bond was the best performer with a decrease in the yield of 21 basis points, while the 22-JAN-2026 maturity bond was the worst performer with an increase in the yield of 18 basis points.
Elsewhere, activities at the FGN Eurobond market traded mostly bearish, following selling pressures across the sovereign curve, except for the Jun-2022 instrument that witnessed buying interests. Market data shows that the average yield climbed by 3 basis points to close at 7.22% on Monday. # Treasury, OMO Bills Trade Quiet as Inflation Fears Rise
