08 June 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: The World Bank cut Nigeria’s economic growth forecast for this year, citing weakness from oil-output disruptions and low prices. The lender, in its semi-annual Global Economic Prospects report, said Africa’s biggest economy is expected to grow 0.8%, down from an estimate of 4.6% in January. Growth is projected to pick up to 3.5% in 2017, it said. Foreign-exchange restrictions, fuel shortages and a plunge in oil production and prices have hit the economy, the bank said in the report. Nigeria’s economy contracted for the first time since 2004 in the first quarter and central bank Governor Godwin Emefiele warned in May that a recession was imminent after a four-month delay in the nation’s budget stalled economic stimulus programs.
FX: The CBN weekly Special intervention auction results are expected today. The intervention rate is still maintained at $/NGN 197.00.
FIXED INCOME: Yesterday’s trading session turned out to be a quiet one. There were some initial sell-off in both T-bills and bonds, but this cooled off towards the close of market. CBN tried to float another OMO bill yesterday 31 Apr 17s, but it was unsuccessful and there was no sale. DMO released the Bond auction circular and on offer are 15bn Feb20s, 40bn Jul34s and 50bn Mar36s, this was the same amount put on offer at last auction. We expect the market to start to price in the effect of more supply.
U.S.: The dollar hit a five-week trough against a basket of currencies on Wednesday, hurt by waning expectations that the Federal Reserve will raise interest rates anytime soon.
The dollar index, which tracks the greenback against a basket of six rivals, edged down 0.1% to 93.740 after dropping as low as 93.68, it’s lowest since May 6. Against its Japanese counterpart, the dollar slipped 0.25% to 107.15 yen, after hitting a low of 106.72 earlier. It climbed from those lows after data showed that China’s imports beat forecasts in May, adding to hopes that the economy may be stabilising. Nevertheless, traders are convinced the dollar will struggle to gain higher ground unless incoming data beats expectations. Investors have almost priced out the chance of a rate increase at the Fed Reserve’s June 14-15 policy review and reduced the likelihood of a July rate hike to around 26%.
E.U.: The European Central Bank started buying corporate bonds on Wednesday with utility and telecommunication securities, according to people familiar with the matter.
France’s central bank bought 3 million euros ($3.4 million) of Engie SA’s bonds in the secondary market on behalf of the ECB, said one of the people, who isn’t authorized to speak about it and asked not to be identified. The ECB also bought 10-year bonds of Telefonica SA, Spain’s biggest telecoms company, according to two people.
The ECB is adding investment-grade corporate notes to its 80 billion-euro monthly purchase program, which already includes covered bonds, asset-backed securities and government debt, as part of efforts to encourage growth.
COMMODITIES: Oil traded near the highest close in more than 10 months as weekly U.S. industry data showed crude stockpiles declined, trimming a glut.
Futures were little changed in New York after advancing 3.6% the previous two sessions to close above $50 a barrel Tuesday for the first time since July. Inventories fell by 3.57 million barrels last week, the American Petroleum Institute was said to report. Government data Wednesday is forecast to show supplies dropped. Repair work on a key Nigerian oil pipeline operated by Royal Dutch Shell Plc is underway, according to a person familiar.
Macro Economic Indicators
Inflation rate (Y-o-Y) for April 2016, 13.70%
Monetary Policy Rate current 12.00%
FX Reserves (Bn $) as at Jun 06, 2016, 26.374
Money Market Highlights
30 Day 9.0184
90 Day 11.4062
180 Day 12.7870
USD 1 Month 0.4470
USD 2 Months 0.5370
USD 3 Months 0.6606
USD 6 Months 0.9542
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 08-Sep-16 7.45
182d 08-Dec-16 9.83
364d 04-May-17 11.71
2y 27-Jul-17 11.56
3y 29-Feb-19 13.71
5y 13-Feb-20 13.93
Indicative Currency Exchange Rates
USDNGN 197.50 199.50
EURUSD 1.1271 1.1473
GBPUSD 1.4432 1.4635
USDJPY 107.09 107.12
USDCHF 0.95875 0.9688
GBPEUR 1.2677 1.2881
USDZAR 14.8395 15.0430
JPYNGN 185.8097 185.9013
CHFNGN 205.70 207.39
EURNGN 225.69 227.05
GBPNGN 285.40 286.79