Treasury Bills Yield Fall Ahead of Feb. Inflation Data
The average yield on Nigerian Treasury bills decreased somewhat ahead of February 2024 inflation data. In the fixed-income market, yields remained elevated and a 4% benchmark interest rate hike is projected to spur additional rate repricing.
Debt market investors hope to offset growing headline inflation, which has prompted monetary policy tightening. Headline inflation is predicted to cross 30% while Fitch Ratings expects the average consumer price index to settle at 26% for the year.
To mitigate the negative effects of surplus money, the central bank has increased Treasury bill sales significantly, partially to entice foreign investors into the economy. This has impacted financial system liquidity levels.
According to information from the FMDQ website, the overnight lending rate expanded by 8 basis points to 31.9%, in the absence of any significant funding flows into the system. Short-term benchmark rates have adjusted above 30% over the week as liquidity pressures persist.
Key money market rates, including the open repo rate and overnight lending rate sustained double digits high trend, settling at 31.38% and 31.86%, respectively
In the secondary market on Tuesday, trading activities closed with bullish sentiments. Fixed-interest securities raised their portfolio holdings after a selling spree. As a result, the average yield contracted by 3 basis points to 18%.
Across the curve, Cordros Capital Limited told investors in a note that the average yield declined at the short (-1bp), mid (-1bp), and long (-6bps) segments following buying interest in the 86-day to maturity (-1bp), 177 days to maturity (-1bp), and 254 days to maturity (-84bps) bills, respectively.
Traders also added that the average yield increased by 2bps to 18.8% in the OMO bills segment in the secondary market. Elsewhere, the FGN bond secondary market activities were mixed but with a bearish tilt.
Based on trading direction, the average yield remained at 18.0%. Across the benchmark curve, the average yield expanded slightly at the short (+1bp) end as market players sold off the MAR-2024 (+3bps) bond but closed flat at the mid and long segments.
Yesterday, the Naira appreciated by 0.90% to close at ₦1,603.38 per dollar at the official market. In the Parallel market, the Naira closed at ₦1,604 to the dollar. In the global commodity market, oil prices increased, as Brent crude rose by 0.41% to $82.55 per barrel, while WTI crude also increased by 0.47% to $78.30 per barrel. #Treasury Bills Yield Fall Ahead of Feb. Inflation Data
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