Nigeria’s Eurobond Yield Rises over Sell Pressure
Nigeria’s US dollar denominated bond faced selloffs pressure in the international market amidst untamed uncertainties in the local economy. The Eurobonds price across standard tenors fell as foreign asset managers sold their interest, causing yield to climb by 12 basis points.
The country’s foreign currency denominated borrowing instrument came under intense sell pressure following inflation surge, and expectation that the Central Bank of Nigeria will probably hike rate in an effort to keep fight market depressed consumer price index.
Eurobonds market in sub-Saharan Africa experienced a downward price trend as market reacted to expectation of US Fed rates cut in September.
Sell sentiment was evident across all ends of the yield curve, leading to an increase in the average yield by 12bps to 9.90%, traders at Cowry Asset Limited said in email note.
US Market
Treasury yields nudged higher early Thursday as traders continued to absorb some slightly stronger than expected U.S. economic data and more cautious comments on interest rate cuts from Federal Reserve officials.
The yield on the 2-year Treasury added 1.9 basis points to 4.465%. The yield on the 10-year Treasury rose 2.1 basis points to 4.182%.The yield on the 30-year Treasury climbed 2 basis points to 4.396%.
UK Market
he UK’s 10-year Gilt yield remained at 4.08%, above a three-week low hit on Tuesday, as traders assessed new economic data to predict the Bank of England’s next moves on interest rates.
This week’s inflation and labor market data complicate the BoE’s decision on whether price pressures are easing enough to cut rates from a 16-year high.
Despite a cooling job market with wages growing at their slowest in nearly two years, services inflation remained high at 5.7%, above the BoE’s forecast of 5.1%.
Germany Bund
Germany’s 10-year bond yield stayed at 2.424%, a three-week low, as investors awaited the ECB’s policy decision.
The ECB is expected to keep interest rates steady today, preferring to wait for more inflation data before deciding on further cuts.
In September, officials will have additional inflation, wage, and productivity data to consider.
The European Central Bank is in no rush and isn’t on a predetermined path, therefore it is expected to avoid explicit guidance at Thursday’s meeting, analysts at Deutsche Bank Research say in a note. That said, the underlying direction of travel is clear, they say.
Deutsche Bank Research economists expect the ECB to follow June’s interest-rate cut with two more reductions this year, to be delivered in September and December. “But a September cut isn’t a done deal, and recent data suggest the ECB staff need to revise the near-term inflation outlook higher,” they say. Markets are pricing in 19 basis points of interest-rate cut for September, according to Refinitiv. Petrol Price Stands at N750.17 in June- NBS
