Treasury Bills Yield Slumps as Inflation Fears Ease
The average yield on Treasury bills slumps on Thursday on subdued inflation rate outlook, according to consensus analysts’ projections. The National Bureau of Statistics will be releasing inflation figure for July 2021 next week with the expectation of a further slowdown in consumers’ price index.
Headline inflation rate printed at 17.75% in June following 18 basis points decline from 17.93% in the month of May due to low base effects.
Disinflation, couple with the monetary policy committee of the apex bank that decided to keep benchmark interest rate reduce the expectation of yields repricing in the fixed income market which has turned cold.
At the primary market auction of the Central Bank of Nigeria (CBN) on Wednesday, the spot rate plunged due to a high level of subscription witnessed in 364-day bills.
The robust market participation at the auction was supported by better financial system liquidity, some analysts told MarketForces Africa. On Thursday, there was pressure on system liquidity from net Treasury Bills issuance worth N104.84 billion.
In a market report, Cordros Capital said the overnight lending rate dipped by 17 basis points to 17.3%, amid funding pressures from net NTB issuances.
Today, the Nigerian Treasury Bills secondary market closed with bullish sentiments as the average yield tapered by basis points to about 5.5%.
Across the benchmark curve, average yield straitened at the short (-28bps) end following demand for the 63-day to maturity (-44bps) bill. Conversely, average yield at the mid and long segments closed flat.
Elsewhere, Cordros Capital hinted in an email that the average yield at the open market operations (OMO) segment remained unchanged at 7.7%.
Also, trading in the Treasury bond secondary market was bullish as the average yield reduced by 8 basis points to 11.6%.
Across the benchmark curve, average yield contracted at the short (-17bps) and long (-7bps) ends due to demand for APR-2023 (-43bps) and APR-2049 (-50bps) bonds, respectively. Meanwhile, analysts said the average yield was unchanged at the mid-segment.
Read Also: Yield Stays Flat on Subdued Appetite in T-Bills Market
Treasury Bills Yield Slumps as Inflation Fears Ease
