Benchmark Yield on Nigeria US Dollar Bonds Edges Near 10%
The benchmark yield on Nigeria US dollar bonds or Eurobonds in the international market surged near 10% as foreign portfolios investors sell down their interest.
The sovereign bonds saw price depreciation short tenor US dollar bonds causing their associated yield to dip. The market has switched to balance Nigeria’s macroeconomic dynamics in their investing decision.
Inflation fighting has propelled a surge in benchmark interest, up 7.50% in 2024 to 26.25% amidst elevated global central bankers’ hawkish push. In the US, latest Fed minutes suggest that time for rates cut may be extended as FOMC seeks to achieve inflation target of 2% with strong employment rate.
Hence, 2-year US treasury yield rose 0.055 percentage point to 4.933% today.
Economists at Goldman Sachs on Friday pushed back their expectations for the first Federal Reserve interest rate cut of the cycle to September from July.
The economists pointed out that recent speeches from Fed officials show a July cut would require not just better inflation numbers but also meaningful signs of softness in activity or the labor market.
Data released Thursday showing lower weekly jobless benefit claims and stronger purchasing managers’ indexes show “this does not look like the most likely outcome.”
In its market update, Cowry Asset Management Limited told investors that the sovereign Eurobonds market continued its negative trend yesterday.
10-year US Treasury yield rose 0.041 percentage point to 4.474% today. Largest one-day yield gain since Friday, May 17, 2024. Also, 30-year US Treasury yield rose 0.028 percentage point to 4.579% today.
The selloffs, according to the investment firm, particularly affected the MAR-29, NOV-27, and SEP-28 maturities, with their yields rising by 14bps, 11bps, and 11bps, respectively, pushing the average yield up by 9bps to 9.87%.
In the bond market, activity for Federal Government of Nigeria (FGN) Bonds was subdued. Investors offloaded MAR-25 and MAY-33 bonds, leading to yield increases of 2bps and 8bps, respectively. This movement caused the average secondary market yield to rise slightly from the previous day’s close of 18.7. #Benchmark Yield on Nigeria US Dollar Bonds Edges Near 10%
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