Bond Market Maintains Bullish Trend as Panic Buying Sets In

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**AfDB projects 4% GDP growth for Africa in 2019***

Inflation at 11.44%

As at January 16, 2019. A c.16bps increase from 11.28% recorded in November 2018

MPR at 14.00%
Left Unchanged for the 15th Consecutive Time at the Jan. 22, 2019 MPC Meeting

External Reserves at $42.97bn
As at February 7, 2019. A c.0.05% decrease from $42.99bn on February 6, 2019

Brent Crude
$61.57pb
As at February 8, 2019. A c.1.22% decrease from $62.33pb on February 7, 2019

Bonds

The Bond market remained significantly bullish with yields compressing further by c.11bps as market players continued to aggress offers on the mid to long end of the curve. The buying interests are mostly linked to some offshore interests, but some panic buying by locals have also accentuated the rate of decline in yields which have now compressed by c.20bps w/w.

In the coming week, the NBS is expected to release data for Q4 2018 GDP and Jan 2019 inflation. Whilst we expect the economic releases to show slightly improved figures from previous levels, we expect investment appetite to be slightly subdued as market players are expected to trade cautiously in view of the elections scheduled to hold next weekend.

Treasury Bills

The T-bills market turned slightly bullish with market players cherry-picking on attractive yields around the mid tenors, in absence of an OMO auction by the CBN. Yields were consequently lower by c.15bps on the day.

In the coming week we expect yields to trend slightly higher as the CBN is expected to sustain its spate of OMO and FX interventions in the market.

Money Market

Rates in the money market remained elevated on the back of the significant OMO mop up in the previous session. The OBB and OVN rates consequently ended the session slightly higher at 18.67% and 19.42% respectively.

We expect rates to trend higher opening next week, as the CBN is expected to resume its week wholesale FX intervention amid an already tightened system liquidity environment.

FX Market

At the Interbank, the Naira/USD rate remained unchanged at N306.70/$ (spot) and N357.10/$ (SMIS). The NAFEX rate in the I&E window depreciated marginally by c.0.02% to N361.73/$, whilst the cash and transfer rates at the parallel market remained unchanged at N359.20/$ and N365.00/$ respectively.

Eurobonds

The NGERIA Sovereigns retreated further in today’s session, with yields trending higher by c.9bps as news of a slowdown in the US-China trade negotiations weighed on risk sentiments in the market.

In the NGERIA Corps, yields were relatively flat across board, we however witnessed slight sell interests on the UBANL and FIDBAN 22s, whilst investors were better buyers of the 2021 maturities.

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