Treasury Bills Yield Crashed by 48bps in May –MarketNews
Treasury bills yield crashed by 48 basis points in May due to an increase buying interest spurred by rate repricing in the primary market auctions. The Central Bank of Nigeria (CBN) has made investment in Treasury bills lucrative for some individuals, corporates and especially deposit money banks.
In an update, ARM Securities analysts, however, said the Nigerian Fixed Income (FI) market reversed its bearish trend in May 2024, buoyed by increased liquidity. The latest rally suppressed yield, which had climbed near 25%. Analysts said. The Treasury bills market ended with the average yield dropping 48bps to 21.72% from more than 22% in April.
Similarly, the FGN bond market witnessed positive sentiment as the average yield fell by 25 basis points month on month to 18.69%. Overall, the Naira fixed income market closed bullish, with average yields down 37 basis points to 20.20%.
FSDH clarified that the fixed income market is adjusting to the increase in policy rate, which reached unprecedented heights due to persistent inflationary pressures. According to the firm, the high policy rate is pushing up yields across the fixed-income market as investors seek higher yields on their investments.
Analysts said with the CBN’s inflation-targeting strategy, there could be more rate hikes in the coming months, depending on the trajectory of inflation rate. “.. The movement in policy rates will continue to modulate yields across the fixed income market”, according to FSDH. Analysts anticipate a further rise in yields across the bond market in Q2-2024. #Treasury Bills Yield Crashed by 48bps in May –MarketNews
