Financial market products & services update

*Financial markets.

*Financial markets.

16 March 2016, Sweetcrude, Lagos — Local and international financial market products and services update.
NIGERIA: Despite the federal government’s refusal to devalue the naira, the Consumer Price Index (CPI), which measures inflation, rose significantly to 11.4% in February compared to 9.6% the previous month, the National Bureau of Statistics (NBS) said on Tuesday.
It attributed the 1.76% rise in the headline index to the faster pace of increase across almost all major divisions that contribute to the index with the exception of the restaurants and hotels division which also rose, albeit, at a slower pace.
The Central Bank of Nigeria (CBN) has argued at every opportunity that devaluing the currency would result in import-induced inflation. However, the currency curbs it put in place since last year to conserve foreign reserves and prop up the naira, have led to sharp spikes in the prices of goods and services in a slowing Nigerian economy.
According to the NBS, the pace of increase of food prices as recorded by the food sub-index increased at a faster pace in February, with the food index rising by 11.3% up by 0.71% from what was recorded in January.

FIXED INCOME: A heavy session yesterday with February inflation prints coming in at 11.4% from 9.6% in January. Generally, CPI doesn’t influence the curve much, but in this case, the increase was much higher than expected. Both bonds and T-bills reacted negatively to this with locals and real money accounts selling inventory. The news has also changed the dynamics of both auctions today and our guidance will be revised higher. In bonds, we did see some resistance above 12% on the March 2024s and Jan 2026s, but we still expect the weak tone to continue today.
FX: The CBN weekly special auction result for last week was released yesterday. Auction for this week will hold tomorrow being Thursday, 17 March 2016.

MARKETS: European stocks rose, Asian equities fell and the dollar strengthened against most major currencies before a Federal Reserve policy review on Wednesday that’s seen shedding light on the timing of U.S. interest-rate increases.
Benchmark share gauges advanced in the U.K., France and Germany, while Japan’s Topix extended Tuesday’s retreat from a five-week high. A measure of dollar strength climbed to a one-week high, supported by speculation the Fed will boost borrowing costs in the coming quarter. The yen fell after Japan’s central bank chief said the policy rate could move deeper into negative territory. Oil rebounded toward $37 a barrel and U.S. Treasuries held near their lowest levels since January.
Financial markets are being swayed by divergent monetary policies in the world’s leading economies. Fed funds futures show the odds of a U.S. rate increase by the end of June have shot up to 54% from about 6% in the past month as data indicated growth is strengthening in the nation

COMMODITIES: Oil rallied after the biggest two-day slump in a month as U.S. industry data showed the pace of crude stockpile growth slowed amid a glut.
Futures advanced as much as 2% in New York after falling 5.6% the previous two sessions, the biggest two-day slide since Feb. 11. Inventories expanded by 1.5 million barrels last week, the American Petroleum Institute was said to report. That’s the smallest reported increase by the API in four weeks.

Macro Economic |Indicators
Inflation rate (Y-o-Y) for February 2016 11.40%
Monetary Policy Rate current 11.00%
FX Reserves (Bn $) as at March 14, 2016, 27.872

Money Market Highlights

O/N 7.5117
30 Day 9.4883
90 Day 10.7218
180 Day 11.8712
USD 1 Month 0.4413
USD 2 Months 0.5223
USD 3 Months 0.6395
USD 6 Months 0.9104

Benchmark Yields
Tenor Maturity Yield (%)

91d 16-June-16 7.17
182d 08-Sep-16 8.50
364d 02-Mar-17 9.50
2y 31-Aug-17 9.85
3y 30-May-18 10.26
5y 13-Feb-20 11.50

Indicative Currency Exchange Rates
Bid Offer

USDNGN 197.50 199.50
EURUSD 1.0985 1.1187
GBPUSD 1.4009 1.4211
USDJPY 113.65 113.68
USDCHF 0.98445 0.9946
GBPEUR 1.2628 1.2832
USDZAR 15.9548 16.1623
JPYNGN 174.8797 174.9803
CHFNGN 198.26 199.95
EURNGN 216.98 218.34
GBPNGN 281.14 282.53

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