22 January 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s oil minister, speaking on a panel at the World Economic Forum in the Swiss resort, said the Organization of Petroleum Exporting Countries needs to meet soon as crashing prices force the group to reconsider its current laissez-faire policy. Saudi Arabia, represented by the chairman of its national oil company, said the kingdom won’t reverse course unless non-OPEC nations play their part in production cuts. “If there are other producers willing to collaborate, Saudi Arabia will be willing also to collaborate,” said Khalid Al-Falih, chairman of Saudi Aramco. “But Saudi Arabia will not accept the role of — by itself — balancing a structural imbalance that is happening today.” While it’s a “very bleak picture” for the oil market in the short term, “the market has overshot on the low side, and it’s inevitable to start turning up,” Al-Falih said.
FIXED INCOME: Post auction, market opened weaker in both bonds and T-bills. Some rebound in bonds with decent real money demand behind the move on June 2019s (-59bps). Feb 2020s still lagging behind after trading above auction cut off level for most of the day. T-Bill yields closed +30bps across the curve.
FX: The CBN held its weekly Special Intervention held yesterday and the intervention rate at $/NGN 197.00.
COMMODITIES: Moody’s Investors Service said that it is reviewing the credit ratings of dozens of energy and mining companies worldwide after cutting its outlook for oil prices and warning the slump triggered by China wasn’t a normal downturn but a fundamental shift.
A total of 69 exploration and production companies in the U.S. including Schlumberger Ltd. and Chesapeake Energy Corp. were put under review for downgrade, as well as 11 mining companies including Alcoa Inc., Moody’s said in separate statements on Friday. The agency reduced its estimates for both West Texas Intermediate and Brent to $33 a barrel for 2016, cutting the U.S. benchmark forecast by $7 and Brent by $10, citing increased supplies from OPEC as well as moderate consumption growth.
CHINA: Billionaire investor George Soros said China’s economy is headed for a hard landing, a slump that will worsen global deflationary pressures, drag down stocks and boost U.S. government bonds.
“A hard landing is practically unavoidable,” he said in an interview with Bloomberg Television’s Francine Lacqua from the World Economic Forum in Davos on Thursday. “I’m not expecting it, I’m observing it.”
Soros, who built a $24 billion fortune through savvy wagers on markets, said he’s been betting against the Standard & Poor’s 500 Index, commodity-producing countries and Asian currencies, while buying Treasuries.
EURO: Mario Draghi said he’s concerned about the outlook for euro-area inflation and is determined to reach his price-stability mandate, a day after saying the European Central Bank could step up its stimulus as soon as March.
“We’ve plenty of instruments,” the ECB president said on Friday at the World Economic Forum in Davos, Switzerland. “We have the determination, and the willingness and the capacity of the Governing Council to act and deploy these instruments.” The comments reflect the ECB’s agreement on Thursday to review its stimulus strategy of buying 1.5 trillion euros ($1.6 trillion) of bonds and driving interest rates below zero.
Macro Economic Indicators
Inflation rate (Y-o-Y) for December 2015 9.60%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at January 20, 2016 28.396
Money Market Highlights
30 Day 8.5985
90 Day 10.2178
180 Day 11.4760
USD 1 Month 0.4253
USD 2 Months 0.5148
USD 3 Months 0.6213
USD 6 Months 0.8532
Tenor Maturity Yield (%)
91d 21-Apr-16 4.31
182d 28-Jul-16 7.39
364d 05-Jan-17 8.00
2y 31-Aug-17 10.26
3y 30-May-18 10.73
5y 13-Feb-20 12.27
Indicative Currency Exchange Rates
USDNGN 197.00 199.50
EURUSD 1.0760 1.0962
GBPUSD 1.4167 1.4369
USDJPY 118.23 118.26
USDCHF 1.00285 1.0130
GBPEUR 1.3042 1.3247
USDZAR 16.4115 16.6048