30 September 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Half the Nigeria’s bonds listed on the JPMorgan Government Bond Index for Emerging Markets will be removed today and the rest next month, the US bank said on Tuesday.
The decision, which means investments funds tracking the index will sell Nigerian bonds, according to Reuters, would add upward pressure to borrowing costs for Africa’s largest economy already reeling from a sharp drop in oil revenues.
JPMorgan said this month it would drop FGN Bonds from its index, citing a lack of liquidity and currency restrictions.
The bank said in a note 50% of bonds would be removed as of September 30, part of its month-end index rebalancing, cutting Nigeria’s weight to 0.79%. The weight of Brazil and South Africa will increase by 0.80% and 0.20% respectively.
FX: The CBN intervened at the special auction funds yesterday at 196.00/197.00.
FIXED INCOME: The OMO auction announcement yesterday brought a halt to the bull run seen in T-bills in the last seven sessions. In bonds, demand had softened from Monday and it puffed up yesterday. Profit taking was the order of the day and mostly from locals. A few offshore accounts making inquiries in small size but most of the activity yesterday was street driven. The same trend is expected today if the CB announces another OMO.
U.S.: Treasuries declined for the first time in three days as gains in Asian stocks curbed demand for the relative safety of government debt.
The benchmark 10-year yield rose with Federal Reserve Chair Janet Yellen and New York Fed President William C. Dudley scheduled to speak Wednesday after saying this month that they still expect to raise interest rates later in the year. Reports this week are projected to show that continued strength in the U.S. jobs markets has kept unemployment at a seven-year low. The Bloomberg U.S. Treasury Bond Index has climbed 1.1% in September, while the MSCI WorldIndex of shares is set for a second monthly drop, declining 5.4%.
COMMODITIES: Commodity markets roiled by turmoil from China to Greece must now brace for another shock as the U.S Federal Reserve prepares to hike rates. Returns from raw materials plunged to least since 1999 last month amid an oversupply in everything from copper to oil and forecasts for the slowest economic growth since 1990 in China.
EUROPE: European stocks advanced, rebounding from yesterday’s decline, as investors paused to assess value in what is heading for the worst quarter in four years.
Carmakers and commodity producers posted the biggest gains of the 19 industry groups on the Stoxx Europe 600 Index. Glencore Plc led miners with an advance of 7.4%, as metal prices rallied. PSA Peugeot Citroen paced auto-related stocks, rising 5.6%.
The Stoxx 600 jumped 1.8% to 345.21 at 8:22 a.m. in London. Shares slidon Tuesday, as concern over a slowdown in Asia and uncertainty over the Federal Reserve’s actions continued to weigh on investor sentiment and stoke volatility. The equity benchmark has fallen 9.5% in the third quarter, heading for its worst performance since 2011. It’s also poised for its first back-to-back monthly drop in more than a year.
Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014 9.30%
Monetary Policy Rate current 13.00%
FX Reserve (Bn $) as at January 09 2015 30.485
Money Market Highlights
30 Days 14.5852 90 Days 15.8238
180 Days 17.0817
USD 1 Month 0.1936
USD 2 Months 0.2591
USD 3 Months 0.3266
USD 6 Months 0.5331 USD 12 Months 0.8548
Tenor Maturity Yield (%)
91d 24-Dec-15 11.21
182d 24-Mar-16 13.68
364d 01-Sep-16 14.08
2yr 27-Aug-17 14.71
3yr 29-Jun-18 14.60
5yr 13-Feb-20 14.73
Indicative Currency Exchange Rates
USDNG 196.00 199.50
EURUSD 1.1115 1.1318
GBPUSD 1.5038 1.5241
USDJPY 120.05 120.10
USDCHF 0.97045 0.9806
GBPEUR 1.3397 1.3601
USDZAR 13.7427 14.9460
JPYNGN 161.8497 161.9503
CHFNGN 204.99 206.68
EURNGN 217.24 219.60
GBPNGN 309.40 310.79
ZARNGN 14.69 16.61