Financial market update

Financial markets12 August 2013, Sweetcrude, Lagos – Local and international financial market products and services update.
US: Investment-grade corporate bonds are showing signs of life following the biggest losses since 2008 as concern wanes that a Federal Reserve pullback from record stimulus will cause a surge in interest rates. Mutual and exchange-traded funds that focus on dollar- denominated, high-grade notes reported $639 million of deposits in the week ended Aug. 7, the most in more than two months, according to analysts.

EUROPE: With the state poised to fully re-access international bond markets at the end of the year and abandon the security of its bailout program, the Irish economy has slid back into recession. Irish borrowing costs tumbled during the past two years as the government slashed the fiscal deficit and eased its bank debt burden. The 10-year yield is at about 3.86 percent, down from more than 9 percent when Ireland requested a bailout in November 2010. The economy, though, is struggling to grow as debt-laden consumers cut spending and exports drop.

CHINA: China’s Yuan advanced the most in a week on optimism that it is stabilizing after two quarters of slowing growth. The People’s Bank of China raised its reference rate for the sixth day in a row, the longest run of gains since November. China’s economy and financial sector showed signs of stabilization recently, though reports say it is too early to say a rebound is under way. Exports and imports increased more than economists forecast in July, government data showed last week. The currency rose 0.07 percent to 6.1190 per dollar.

BONDS: Continued bullish markets last week Wednesday, the sentiment spread across the whole curve with yields dipping an average 22bps on average. Yields have retraced in the last three sessions to close to the levels preceding the increased CRR announcement.

BILLS: Bullish trend again in the markets last week Wednesday, with market participants taking a view that rates will not spike as expected on the back of the CRR debits. Rates came off about 20 bps on the 30-200 day bills where there was the most activity. The longer dated maturities traded flat on the day. Funding levels over the next couple of days are very crucial in charting direction especially as the T-Bill auction was heavily oversubscribed.

MONEY MARKET: OBB and unsecured O/N rates spiked about 600bps to about 17.00% as the CRR debit hit last week Wednesday. Market opened up N789billion last week Wednesday and the estimated debit was N896billion, the rise was also fuelled by the lack of availability of the CBN window as it was a WDAS day.

CBN WDAS AUCTION: CBN offered $300 million and sold $248.45, lowest intervention rate 157.3075 (1% commission inclusive). 15 banks bid.

Indicative Currency Exchange Rates
Bid        Offer

EURUSD      1.3322       1.3332
GBPUSD      1.5479       1.5489
USDJPY        96.52        96.92
USDCHF      0.9240      0.9260
GBPEUR     1.1619         1.1629
USDZAR     9.8000      9.9000
USDNGN    160.20       160.70
JPYNGN     1.6598       1.7098
CHFNGN    173.38       177.38
EURNGN    213.42      217.42
GBPNGN    247.97       251.97
ZARNGN    16.35          18.35

WTI crude swung between gains and losses after the biggest rally in more than a week as hedge funds cut bullish bets. Futures fluctuated in New York after surging 2.5 percent on Aug. 9, the most since Aug 1. WTI for September delivery was at $106.07 a barrel in electronic trading on the New York Mercantile Exchange, up 10 cents.

Interest rates
NIBOR (%)                      LIBOR (%)

O/N             19.5000          USD 1 month       0.1846
7 Day           20.2917           USD 2 month      0.2267
30 Day        20.7500          USD 3 month      0.2647
60 Day        21.1250           USD 6 month      0.3945
90 Day        21.5000          USD 12 month    0.6649
Y/Y Consumer Inflation June 2013 :      8.4%
FX Reserves: 17 July 2013 (USD bn)    46.923
MPR                                                             12.00%
Source: FMD and CBN
Source: Reuters, Bloomberg, Central Bank of Nigeria, Financial Market Dealers Association Standard Chartered Bank Nigeria.

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