16 December 2016, Sweetcrude, Houston — Local and international financial market products and services update
NIGERIA: Nigerian inflation accelerated for the 13th consecutive month in November, even as the central bank left its main lending rate at a record-high to balance price pressures with supporting a slumping economy.
The inflation rate in West Africa’s biggest economy climbed to 18.5% from 18.3% in October, the Abuja-based National Bureau of Statistics said in an e-mailed statement on Thursday. Prices increased 0.78% in the month. The median estimate of 10 economists surveyed by Bloomberg was for inflation to accelerate to 18.6%, a level last hit 11 years ago.
Food inflation increased by 17.2%, while the average price of gasoline climbed to 146.7 Naira compared with 145.9 Naira in October, according to the statistics agency’s data. The index’s rise was mainly driven by increases in the prices of imported foods, meat, bread and cereals and fish, according to the report.
FX: Trading pattern still unchanged in the interbank market. Turnover on the yesterday was traded within the $/NGN 304.50 -315.50, based on FMDQ portal
FIXED INCOME: There was an initial bearish reaction to the bond auction prints at the start of yesterday’s session. This was short-lived and demand was evident particularly on the off the run bonds. The Mar 2024s and July 2034s were badly squeezed as the street is low on inventory on those papers. We expect the strong tone in bonds to continue today amidst slight profit taking. At the OMO auction, N43.44bn was mopped up yesterday at 22.74% yield. Bill market turned slightly bearish as the constant OMO auctions have taken a decent chunk of the liquidity.
U.S.: The dollar rallied to its strongest level since 2003 against the euro, while gold plunged as the prospect of a steeper path for U.S. interest rates going forward filtered through markets. U.S. stocks rebounded from their worst day in two months as havens retreated.
The Fed’s pivot toward hawkishness is a step in the shift away from central-bank policy dominating market sentiment, with the potential for an increase in fiscal stimulus now in focus. While stocks have rallied and bonds have tumbled since Donald Trump’s election as U.S. president fueled bets on an uptick in spending, the Fed stands largely alone in actively tightening policy, fueling the dollar’s surge.
U.K.: The Bank of England kept its key interest rate at a record low and noted that the pound’s recent appreciation may mean a slower pickup in inflation next year.
The MPC, led by Governor Mark Carney, voted 9-0 to hold the benchmark rate at 0.25% and also unanimously voted to keep its two asset-purchase programs running as planned. After cutting the rate in August after the Brexit vote, it said on Thursday policy can now respond “in either direction” to the changes in the outlook.
COMMODITIES: Gold has pushed back after taking another battering in a miserable quarter. The precious metal rose to trim a sixth weekly loss that’s been driven by a more aggressive Federal Reserve, investor enthusiasm about President-elect Donald Trump’s policies and sales from exchange-traded funds.
Spot bullion climbed as much as 0.6% to $1,135.35 an ounce and was at $1,134.22 at 3:45 p.m. in Singapore, according to Bloomberg generic pricing. The gain came after the raw material’s 14-day relative-strength held below 30 for six sessions to Thursday, signalling to some analysts it’s oversold.
Macro Economic Indicators
Inflation rate (Y-o-Y) for November 2016, 18.50%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at Dec 12,2016, 25.048
Money Market Highlights
30 Day 15.6053
90 Day 18.1590
180 Day 21.4304
USD 1 Month 0.70728
USD 2 Months 0.78778
USD 3 Months 0.97039
USD 6 Months 1.29822
USD 12 Months 1.06675
Tenor Maturity Yield (%)
91d 16-Mar-17 14.82
182d 15-Jun-17 19.01
364d 02-Nov-17 21.80
2y 30-May-18 19.34
3y 29-Jun-19 15.62
5y 15-Jul-21 15.61
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.0349 1.0551
GBPUSD 1.2346 1.2546
USDJPY 118.08 118.10
USDCHF 1.02295 1.0331
GBPEUR 1.1811 1.2014
USDZAR 13.8374 14.0404
JPYNGN 2.6197 2.7203
CHFNGN 312.74 314.39
EURNGN 338.92 340.28
GBPNGN 404.78 406.18