By NBS Media,
Just out – Inflation figures for September 2018 released by the National Bureau of Statistics (NBS). Headline inflation increased by 5bps to 11.28% YoY (August: 11.23% YoY), to mark the second consecutive increase in headline inflation. On a month-on-month basis, headline inflation declined to 0.84% MoM (August: 1.05% MoM). Meanwhile, core inflation continued its yearlong downward trend to record 9.84% YoY (August: 10.02% YoY). Food inflation rose by 15 bps to record 13.31% YoY (August: 13.16% YoY). Urban inflation rose marginally by 3bps to 11.70% YoY (August: 11.67% YoY). Similarly, rural inflation advanced by 8bps to 10.92% YoY (August: 10.84% YoY).
By Afrinvest Research,
FGN/CBN Bills Market Update: Average T-Bills Rate Settled at 12.7% as PMA Holds on Wednesday
Last week, trading on the Treasury Bills (“T-Bills”) secondary market was flattish as rates dipped marginally by 1bp W-o-W to close at approximately 12.7%. Buying interest was observed in short and medium-term bills both declining 6bps and 3bps W-o-W respectively. On the flip-side, long term bills all advanced 29bps W-o-W on the back of sell-offs by investors, ahead of Open Market Operations (“OMO”) auction on Thursday.
At the OMO auction, there was no sale on the 91-Day OMO bill due to more attractive options in the secondary market. However, the 182-Day and 350-Day bills recorded bid to cover ratios of 0.3x and 1.4x respectively which depicts investors interest in high yield long-term instruments despite pre-election jitters. Thus, a total of N249.1bn was mopped up in this offer leaving liquidity levels at N144.9bn positive at the close of the week.
This week, the CBN is set to conduct its third Primary Market Auction (“PMA”) of this quarter to rollover maturing bills worth N147.6bn. Despite expected inflows totaling N494.8bn into the financial system from T-Bills and OMO maturities of N147.6bn and N347.1bn respectively, we expect liquidity to stay around current levels due to the PMA auction and possible OMO auction this week. We anticipate sustained interest in longer term bills on attractive yields as investors target the 364-day bill at the PMA and longer tenor (over 300 days) at the expected OMO auction this week.
FGN Bonds Market Update: Quiet Trading as Bearish Sentiment Persists due to Continued Sell-Offs
The local bond market was relatively quiet last week with continued weak sentiment as investors cautiously await the next bond auction scheduled for next week. Accordingly, average yields on benchmark FGN Bonds advanced 6bps to close at 14.8% W-o-W.
Going into the week, we expect the quiet trading to persist as investors anticipate the next auction as well as cautiously anticipate inflation numbers. We advise investors to seek opportunities in discount bonds (bonds trading below par value of N100.0) and attractive yields like the FEB 2020 which advanced the most up 30bps W-o-W to 14.06% followed by the FEB 2028 which advanced 15bps W-o-W to 15.25%.