Financial market products & services update

*Financial markets.

*Financial markets.

17 May 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Talks between the Federal Government and organised labour on the increase in the pump price of petrol ended in a deadlock on Monday night. Briefing journalists at the end of the four-hour meeting on Tuesday morning, the Secretary to the Government of the Federation, Mr Babachir Lawal, said the two parties had “a fruitful discussion and will continue from where we stopped.” The meeting, which ended at about 12 midnight, will resume at 3pm on Tuesday (today). Lawal, however, refused to answer further questions from newsmen. The Federal Government, however, began another round of meeting with the Joe Ajaero-led faction of the labour movement at about 12.15am on Tuesday after its meeting with the Ayuba Wabba-led Nigeria Labour Congress. Wabba confirmed that discussions with the Federal Government would continue by 3pm on Tuesday (today). Sources at the meeting said the labour leaders were not convinced by the figures presented by the government team.

FX: The CBN weekly Special intervention results are yet to be released. The intervention rate was maintained at $/NGN 197.00.

FIXED INCOME: Market opened wider this week, following the inflation data released just before market open. Data showed another jump in Y-O-Y from 12.80% to 13.70% for the month of April. The high cost of goods and services and scarce foreign exchange situation are still impacting the system. There was a lot of price action at market open without the expect volumes following suite. T-bill yields are up by 22bps while bond yields are up by 10bps. T-bill auction on Wednesday would be affected by this recent sell-off. O/N ranged between 10% – 12% because money market liquidity has shrunk to 120bn from about 380bn over the past weeks.

U.K.: The UK’s inflation rate, as measured by the Consumer Prices Index, fell to 0.3% in April, according to the Office for National Statistics (ONS). The fall, from March’s rate of 0.5%, is the first since September. A drop in airfares and prices for clothing, vehicles and social housing rent were the main reasons for the drop in the rate, the ONS said. The Bank of England said last week that it expected inflation to increase in the second half of the year.

JAPAN: Japan’s economy is estimated to have returned to growth in the first quarter following a contraction at the end of 2015. Data due on Wednesday is forecast to show a slight pickup in private consumption, compensating for falling business investment. Even so, the International Monetary Fund only sees an expansion of 0.5 percent this year and a drop in 2017 following a sales-tax increase.

COMMODITIES: Oil advanced to a seven-month high before U.S. government data forecast to show crude stockpiles dropped for a second week, easing a glut. Oil has advanced more than 80 percent since slumping to the lowest in 12 years earlier this year on signs the global glut will ease as U.S. production declines. The market moved into a deficit earlier than expected following supply disruptions in Nigeria and an increase in demand, according to reports. West Texas Intermediate for June delivery rose as much as 70 cents to $48.42 a barrel on the New York Mercantile Exchange. Brent for July settlement added as much as 50 cents, or 1 percent, to $49.47 a barrel on the London-based ICE Futures Europe exchange.

Macro Economic Indicators
Inflation rate (Y-o-Y) for April 2016,         13.70%
Monetary Policy Rate current                     12.00%
FX Reserves (Bn $) as at May 13, 2016,    26.762

Money Market Highlights

O/N                            10.50
30 Day                       9.9705
90 Day                     12.3647
180 Day                   12.9290
USD 1 Month           0.434
USD 2 Months         0.5164
USD 3 Months         0.6276
USD 6 Months         0.9069
USD 12 Months       1.06675

Benchmark Yields
Tenor     Maturity     Yield (%)

91d           18-Aug-16       8.08
182d         17-Nov-16     10.30
364d        04-May-17    12.65
2y             27-Apr-17      12.09
3y             29-Jun-19     14.05
5y             13-Feb-20     14.14

Indicative Currency Exchange Rates
Bid        Offer

USDNGN   197.50      199.50
EURUSD    1.1220      1.1422
GBPUSD    1.4359      1.4561
USDJPY     109.56      109.59
USDCHF    0.97355   0.9837
GBPEUR    1.2671      1.2875
USDZAR    15.5597    15.7631

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