Financial market products & services update

*Financial markets.

*Financial markets.

07 September 2016, Sweetcrude, Houston — Local and international financial market products and services update.
NIGERIA: Nigeria’s trade deficit narrowed in the second quarter boosted by a currency float in June lifting exports, the national bureau of statistics said on Tuesday, but the rise was not enough to help the economy avoid a recession. Africa’s largest economy entered a recession in the second quarter, after persistent low oil prices hammered vital public finances and the naira, prompting foreign investors to flee bond and equities markets, which caused chronic dollar shortages. The central bank floated the currency in June to ease dollar shortages and preserve its dwindling reserves.

FX: Market traded yesterday ranging between $/NGN 305.00–335.00 and NIFEX printed at $/NGN327.00.

FIXED INCOME: The expected reaction to the higher amount on offer at next week’s bond auction was evident in yesterday’s trading session. Bonds sold off and average yield moved higher by 9bps to close at 15.01%. With money market now short approx N98bn,T-bill market traded bearish. O/N rate also moved higher, closing at 20%. We expect the bearish sentiments to persist today.

E.U: Mario Draghi had a chance to upgrade the European Central Bank’s economic outlook. Then Brexit probably took it away.
When the ECB president lays out fresh growth and inflation projections for the euro area on Thursday, they’ll likely be little changed from three months ago. But those forecasts will mask an underlying picture that has changed dramatically as the U.K.’s decision to quit the European Union adds to the region’s political and banking crises.
The updated outlook will play a key part in the Governing Council’s meeting in Frankfurt this week. Before Brexit, some policy makers had suggested the projections might be revised upward, affirming that current stimulus is sufficient. Now most economists surveyed by Bloomberg predict that downside risks will force the ECB to extend quantitative easing before the end of the year.

U.K: U.K. house-prices fell for a second month in August, as high prices curbed demand and sales activity softened, Halifax said.
Prices slipped 0.2%, after dropping 1.1% in July, the mortgage lender said in a statement on Wednesday. In the three months through August, values grew 0.7%, the slowest quarterly pace since December 2014. From a year earlier, values increased 4.1% to an average 213,930 pounds ($286,923), while the three-month annual rate of growth slowed to the least since 2013.
“House-price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase,” said Martin Ellis, an economist at Halifax. “There are also signs of a softening in sales activity.

COMMODITIES: One of the world’s biggest commodities traders doubts oil producers will be able to agree on curbing output to pull up prices.
While it’s “easier” to have talks on freezing supplies now than it was at a meeting in Doha earlier this year, a deal is unlikely at a gathering in Algiers later this month, said David Fyfe, Gunvor Group Ltd.’s head of market research and analysis. Producers have pledged to discuss measures to help the market, but Saudi Arabia has said it sees no need to limit oil output and Russia expressed doubt that a cap is needed.
Crude has jumped more than 10% since early August amid speculation that global producers will be able to reach an international agreement to cap output and shrink a global glut.

Macro Economic Indicators
Inflation rate (Y-o-Y) for July 2016,            17.13%
Monetary Policy Rate current                       14.00%
FX Reserves (Bn $) as at Sep 02, 2016,      25.363

Money Market Highlights

O/N                            27.3750
30 Day                       19.5770
90 Day                       19.6642
180 Day                     22.2070
USD 1 Month           0.5193
USD 2 Months        0.6618
USD 3 Months        0.8334
USD 6 Months        1.2486
USD 12 Months      1.06675

Benchmark Yields
Tenor         Maturity         Yield (%)

91d                08-Dec-16          15.09
182d              16-Feb-17           18.45
364d             31-Aug-17           22.07
2y                  30-May-18         18.44
3y                  29-Jun-19          14.79
5y                  15-Jul-21            14.88

Indicative Currency Exchange Rates
Bid         Offer

USDNGN          314.00     315.00
EURUSD           1.1142      1.1343
GBPUSD           1.3289     1.3488
USDJPY            101.61      101.64
USDCHF          0.96835   0.9740
GBPEUR          1.1815       1.2019
USDZAR          13.9483    14.1548
JPYNGN          3.0497      3.1503
CHFNGN         323.85      325.54
EURNGN         353.10      354.50
GBPNGN         411.55       412.94

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