10 July 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: Analysts have expressed fears that Nigeria will continue to lose market share in the global oil and gas industry over its failure to anticipate and pro-actively respond to the possible impacts of developments in the sector in other countries, there are already projections in some quarters that demand for Nigeria’s oil and gas and its market share will shrink drastically as attention shifts elsewhere and towards emerging Africa oil countries.
US: Federal Reserve Bank of Richmond President Jeffrey Lacker said that “some of the slowdown is real” for the U.S. economy though the reduction in growth isn’t severe enough to tip the economy back into a recession. Lacker has said the Fed will probably have to raise rates in mid-2013, contradicting the FOMC’s statements this year that economic conditions will probably warrant “exceptionally low” levels of the federal funds rate at least through late 2014. U.S. central bankers cut the benchmark lending rate to a record- low range of zero to 0.25 percent in December 2008.
CHINA: Chinese stocks traded in the U.S. fell the most in two weeks, led by energy and commodity producers, after inflation in the world’s second-largest economy eased to the lowest level since January 2010. Government data showing the consumer price index rose 2.2 percent in June, the slowest pace in more than two years, follows the second interest-rate cut in a month last week. Premier Wen Jiabao said downward pressure on the economy is still “relatively large” and the government will intensify policy fine-tuning, the state-owned Xinhua News Agency reported on July 8.
Bonds – Light buying interest recorded in the bond market on Monday, a likely semblance to the trend in the previous week of an initial dip in yields and then profit taking later in the week, nothing aggressive expected this week though as traders remain cautious of duration and increased uncertainty in the global economic space.
Bills – Initial rally in on Monday’s session pulled yields off 30-50bps down across board, profit taking moves towards the close of the day’s session corrected yields upwards but still closed 10bps lower than opening levels.
Money Market – OBB and O/N rates at 15.50% and 16.00% respectively.
CBN WDAS AUCTION
Offered: $200mio Sold: $163.53mio
Marginal rate: 155.87
Weighted average: 155.96
No. of Banks: 16
Hi Low Close Pre.Close
USD/NGN 161.40/50 160.50/60 160.80/90 161.10/20
NIBOR (%) LIBOR (%)
O/N 15.7083 USD 1 month 0.2488
7 Day 16.0417 USD 2 month 0.3438
30 Day 16.3333 USD 3 month 0.4576
60 Day 16.6250 USD 4 month 0.5591
90 Day 16.8333 USD 6 month 0.7364
USD 12 month 1.0695
Y/Y Consumer Inflation May 2012 : 12.7%
FX Reserves: 05 July 2012 (USD bn) 36.545
Source: FMD and CBN