13 November 2015, Sweetcrude, Lagos – Local and international financial market products and services update.
NIGERIA: Nigerian crude oil differentials were expected to come under further downward pressure due to a persistent backlog of unsold cargoes, traders said on Thursday.
As many as 40 cargoes in Nigeria’s December export programme and about 10 in November’s schedule are unsold, they said. The ample supply is likely to weigh on differentials even though falling Brent prices will boost refining margins.
Qua Iboe was offered at dated Brent plus $1.00. One trader said sold prices for December cargoes could weaken to as low as dated parity, which would be a multi-year low.
FIXED INCOME: Market trend totally reversed yesterday, bond yields inched up 88bps and T- bills yields inched up 38bps. A lot of profit takers in the market leading to gapping prices and subsequently wider yields on the bonds. T-Bills also caught the bug as well but with less intensity. Amidst the selloff in bonds, PFAs demand were been filled. Average bond yield now 10.50% and average bill yield at 3.17%. We think some of the selling would continue today.
FX: The CB maintained the Special auction rate at 197.00 yesterday depreciating 2kobo from Wednesday. Gross FX reserves on a 30 day moving average now at $30.442bn (10th Nov 2015) from $30.192 as at 30 Oct 2015.
COMMODITIES: Only a substantial rise in Chinese metals demand is likely to be sufficient to balance copper and aluminum markets, according to Goldman Sachs Group Inc., which said recent output cut by miners aren’t large enough to rescue prices. Copper fell to the lowest since 2009.
The rout in metals prices spurred by China’s slowdown and a rising dollar has prompted miners including Glencore Plc and Alcoa Inc. to cut capacity this year. Copper futures in London are headed for a fifth straight weekly loss, dropping on to the lowest price in six years. Metals demand in China, the top user, slipped again in October, Goldman said, citing an in-house gauge of consumption in Asia’s top economy.
U.S: The Fed’s decision to delay raising interest rates has helped to offset the economic headwinds caused by a strengthening U.S. dollar, Fed Vice Chairman Stanley Fischer said, adding that it “may be appropriate” to raise rates next month.
The dollar has gained around 10% against the euro and 2.3% against the yen since the start of the year. The greenback’s rise has dragged on trade and slowed growth as a result. Widening interest rate differentials and “heightened concern about the global outlook and an associated decrease in investor risk tolerance” are causes behind the dollar’s rise, Fischer said Thursday.
While Fischer didn’t make any predictions about whether the Fed will raise rates for the first time since 2006 at its Dec. 15-16 meeting, he did note that the October Federal Open Market Committee statement indicated that a move next month “may be appropriate.”
E.U: Lackluster growth in the euro area’s two largest economies that has so far proved insufficient to reignite inflation provided more evidence for the European Central Bank to chew over as it examines the need for fresh stimulus.
Germany’s gross domestic product rose a seasonally adjusted 0.3% in the three months ended Sept. 30, after increasing 0.4% in the previous quarter, the Federal Statistics Office in Wiesbaden said on Friday. French GDP also expanded 0.3%, having stagnated in the April-June period, a separate release earlier showed. GDP figures for the euro area are scheduled to be published later on Friday, with economists predicting the expansion held at 0.4%.
Macro Economic Indicators
Inflation rate (YoY) for Nov., 2014 9.40%
Monetary Policy Rate current 13.00%
FX Reserve (Bn $) as at January 09 2015 30.442
Money Market Highlights
30 Days 12.5951 90 Days 14.3674
180 Days 16.1670
USD 1 Month 0.1957
USD 2 Months 0.2785
USD 3 Months 0.3591
USD 6 Months 0.5950 USD 12 Months 0.9284
Tenor Maturity Yield (%)
91d 11-Feb-16 01.56
182d 05-May-16 04.62
364d 20-Oct-16 05.14
2yr 31-Aug-17 08.75
3yr 30-May-18 09.41
5yr 13-Feb-20 11.51
Indicative Currency Exchange Rates
USDNG 197.50 199.48
EURUSD 1.0666 1.0848
GBPUSD 1.5117 1.5319
USDJPY 122.73 122.76
USDCHF 0.99835 1.0086
GBPEUR 1.4032 1.4236
USDZAR 14.2063 14.4097
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