Financial market products & services update

*Financial markets.

*Financial markets.

27 May 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The full implementation of the N6.03 trillion 2016 budget will depend on the ability of the federal government to meet its revenue targets, the Minister of Finance, Mrs. Kemi Adeosun, has said. The minister spoke yesterday at the House of Representatives sectoral debate on economic diversification and said: “I cannot promise that every single agency would receive every money appropriated for them (because) the budget is an estimate and funds would be released based on revenue.” Assuring the legislators, however, that government was committed to ensuring that available funds were judiciously deployed, monitored and backed by result measurement, she said that efforts were being intensified to boost revenue generation outside the sale of crude oil.

FX: The CBN weekly Special intervention was held yesterday with results. The intervention rate is still maintained at $/NGN 197.00.

FIXED INCOME: Tone in bills remained strong even though there was an OMO auction. Money market liquidity encouraging street to close treasury-bill shorts and hold inventory. Bonds saw some more selling – and reacted more than the bill market to the OMO announcement. Minimal demand evident but there was not much enthusiasm to lift offer prices. Real money accounts interested in the Apr 17s. These are no more actively traded but cheaper to pick up vs. the 20 Apr 17 t-bill with the same maturity date. With an unsuccessful OMO today (217-day bills were offered), we could see some more buying in bills tomorrow while the bond market will be mostly quiet to close the week. O/N rates still at 8%.

COMMODITIES: Oil trimmed its third weekly advance as Canadian energy producers moved to resume operations after wildfires eased. Brent for July settlement slid as much as 79 cents, or 1.6 percent, to $48.80 a barrel on the London-based ICE Futures Europe exchange.

U.S.: The U.S. Federal Reserve on Thursday continued to lay the groundwork for an interest rate increase in the next two months, with a senior policymaker saying the economy will likely be ready for such a move “fairly soon.” Federal Reserve Governor Jerome Powell, a voting member of the U.S. central bank’s rate-setting committee, said in a speech in Washington that he felt the economy was on a “solid footing” and within reach of the Fed’s inflation and employment goals. But he added that the uncertainty surrounding Britain’s June 23 referendum on whether to leave the European Union was an argument in favor of the Fed exercising “caution” as it ponders whether to raise rates at its June 14-15 policy meeting. The Fed will hold another policy meeting on July 26-27.

E.U.: A declaration at the G7 meeting in Japan says a vote by the UK to leave the European Union would pose a “serious threat to global growth”. In its final statement, the group warned that a UK exit from the EU would reverse the trend of increased global trade, investment, and jobs. The meeting brings together the world’s leading seven industrialised nations. The final communiqué set global growth as a priority for dealing with threats to the world’s economy and security. But the warning about the economic consequences of the UK leaving the European Union comes as Britain prepares for a referendum on 23 June. Prime Minister David Cameron has been campaigning for Britain to stay within the 28-country bloc with recent polls suggesting a lead for those who support remaining within the EU.

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 23, 2016,    26.5070

Money Market Highlights

O/N                              7.9717
30 Day                       10.2490
90 Day                       12.0284
180 Day                     13.5277
USD 1 Month           0.4497
USD 2 Months         0.5531
USD 3 Months         0.6666
USD 6 Months         0.9756
USD 12 Months       1.06675

Benchmark Yields
Tenor       Maturity      Yield (%)

91d            01-Sep-16        8.72
182d          01-Dec-16       9.44
364d         04-May-17      11.62
2y              27-Apr-17        11.01
3y              29-Jun-19       13.28
5y              13-Feb-20       13.39

Indicative Currency Exchange Rates
Bid         Offer

USDNGN         197.50        199.50
EURUSD          1.1078        1.1280
GBPUSD          1.4541         1.4743
USDJPY           109.67        109.70
USDCHF          0.98535     0.9955
GBPEUR          1.2996        1.3200
USDZAR          15.4467      15.6501

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