T-Bill Ends Flat as Disinflation Sets Stage for ‘No Policy Rate Hike’
T-bill yield closed flat on Monday as bond market records bearish outings as some analysts polled by MarketForces Africa said that the monetary policy will likely hold policy rates in the next committee meeting.
Headline inflation rate pressure subsided for three consecutive months from April before it printed at 17.75% in June 2021. In their separate projection, analysts see the monetary policy committee voting to hold benchmark interest rates to support the pro-growth stance of the Godwin Emefiele led Central Bank.
Following the cold outing in the fixed income space, the Nigerian Treasury Bill secondary market traded flat as the average yield was unchanged at 6.7%.
Last week, the Nigerian Treasury Bills secondary market turned bullish on the back of improved system liquidity with ₦66.14 billion inflow with average yield across instruments dipping 19 basis points week on week to close at 6.69% Friday.
Afrinvest said in an email to clients that an improved buying interest was seen on the mid-and long-dated maturities as yields contracted 54 and 34 basis points week on week respectively while sell-offs were recorded on short-term bills, as average yield advanced 31 basis points.
At the Central Bank of Nigeria (CBN) Primary Market Auction held last week, the Apex Bank allotted a total of ₦150.00 billion across all tenors with the 91- and 182-Day bills retaining their previous stop rates of 2.50% and 3.50% respectively, while the 364-Day bill declined 48 basis points to 8.67%.
Meristem Securities fixed income analysts had projected that subscription level would determine stop rates on the treasury bills auction conducted on Wednesday.
Elsewhere, the average yield at the open market operations (OMO) segment contracted by 58 basis points to 8.7% as pressures mount on interbank rates.
Read Also: Disinflation: Nigeria’s Monetary Authority to Keep Key Rates
Last week review shows that the Federal Government of Nigeria (FGN) bond secondary market closed marginally negative last week as average yield across all instruments improved 9 basis points to settle at 12.16%.
The average bond yield had printed at 12.07% in the previous week. Afrinvest said most buying interests were seen on the JAN-22, MAR-24, and MAR-25 instruments as their respective yields contracted 139, 10, and 6 basis points respectively.
Today, the overnight lending rate expanded by 675 basis points to 11.5%, according to Cordros Capital market report in the absence of any significant inflow into the system.
Similarly, trading in the Treasury bond secondary market was bullish as the average yield pared by 2 basis points to 12.1%.
Cordros Capital analysts said across the benchmark curve, average yield contracted at the mid (-2bps) and long (-4bps) segments due to demand for the JUL-2030 (-4bps) and JUL-2034 (-16bps) bonds, respectively; the short end was flat.
In a related development, the Nigeria foreign exchange market traded tight on Monday amidst declining gross external reserves.
Naira sheds 0.3% to N411.67 a dollar at the Investors and Exporters window but appreciated by 0.2% to N505.00 in the parallel market.
T-Bill Ends Flat as Disinflation Sets Stage for ‘No Policy Rate Hike’
