Financial market products & services update

*Financial markets.

*Financial markets.

11 May 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The Minister of Finance, Mrs. Kemi Adeosun, on Tuesday said the Federal Government would tailor its spending to critical sectors of the economy that would create the needed impact on the well-being of the people. The minister stated this during a panel discussion on the economy at the Ogun State Investment Forum in Abeokuta. She said that the spending, which would be done in an effective manner, would be used to reset the economy by repositioning it on the path of growth. Adeosun claimed that government’s spending in previous years had been ineffective and not directed at the right areas, noting that the current administration was determined to ensure that going forward, all government spending would achieve maximum impact.

FIXED INCOME: OMO auction announcement brought out sellers in both bills and bonds. In bonds, the papers (5, 10 and 20yr) being re-tapped at today’s auction continued to see the most pressure. Weakness in bills was marginal with liquidity supporting demand. Money market estimated to be long N330bn with O/N rates closing unchanged at 4%. At the OMO, N42.99bn of 233day paper was sold at 10.68% yield. With OMO rate closing 56bps higher than the last auction (29th of April), this may cause more negative reaction today.

FX: The results of the CBN weekly Special intervention have been released. The rate was maintained at $/NGN 197.00.

U.S.A.: The U.S. economy is on track to grow by 2.2 percent annualized rate in the second quarter following data that showed stronger consumer spending and fixed investments, the Atlanta Federal Reserve’s GDPNow forecast model showed on Tuesday. The latest GDP estimate was faster than the 1.7 percent pace reported on May 4, the regional Fed said. The forecast for second-quarter consumer spending growth increased to 3.0 percent from 2.6 percent, while fixed investments were projected to grow 2.2 percent compared with 0.4 percent, the Atlanta Fed said.

U.K: The UK’s trade deficit for the first quarter is at its biggest since 2008. The gap between imports and exports for the first three months of 2016 stands at £13.3bn, up from £12.2bn in the fourth quarter of 2015, says the Office for National Statistics (ONS). Analysts said this was more evidence of the weight of global economic weakness on the UK. One described the figures as “truly horrible” UK economic growth has already slowed to 0.4% in the first quarter. The ONS said the UK trade gap widened over the quarter because of a £1.9bn rise in imports such as mechanical machinery, cars, clothing, jewellery and footwear. Meanwhile, exports increased by just £500m, led by chemical products.

COMMODITIES: Oil prices dipped on Wednesday as Canadian oil sand production was expected to gradually ramp up following forced closures due to wildfires, and as record crude inventories, especially in the United States put pressure on markets. An ongoing fight by Middle East producers for market share in Asia also weighed on prices, countering production declines and disruptions around the world. International Brent crude oil futures were trading at $45.49 per barrel, down 3 cents from their last settlement, while U.S. West Texas Intermediate (WTI) crude futures were down 8 cents at $44.58 a barrel.

Macro Economic Indicators
Inflation rate (Y-o-Y) for March 2016,       12.80%
Monetary Policy Rate current                      12.00%
FX Reserves (Bn $) as at May 09, 2016,    26.832

Money Market Highlights

O/N                              3.7500
30 Day                         8.2277
90 Day                        10.7258
180 Day                      12.2741
USD 1 Month             0.4387
USD 2 Months          0.5190
USD 3 Months          0.6296
USD 6 Months          0.9054
USD 12 Months        1.06675

Benchmark Yields
Tenor     Maturity     Yield (%)

91d            04-Aug-16     7.84
182d         03-Nov-16     8.87
364d        04-May-17     12.01
2y             27-Apr-17       11.47
3y             29-Jun-19      12.71
5y             13-Feb-20      13.17

Indicative Currency Exchange Rates
Bid        Offer

USDNGN      197.72      198.42
EURUSD      1.1287       1.1489
GBPUSD       1.4310      1.4512
USDJPY        108.64      108.67
USDCHF       0.96935   0.9795
GBPEUR       1.2552      1.2756
USDZAR       15.1661     15.3695

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