22 June 2017, Sweetcrude, Houston — The local and international financial market products and services update.
NIGERIA: There are indications that the National Assembly is ready to tackle the executive arm of government at the Supreme Court over the powers of appropriation, which has been called into question with the passage of the 2017 budget.
This followed feelers that the executive was fashioning out modalities to approach the Supreme Court and challenge what the lawmakers have said is the power to tinker with any money bill sent to the Legislature.
The relief that followed the signing of the 2017 budget into law 24 days after it was transmitted to the executive has been shrouded by a brewing controversy over the lawmakers’ increase of the budget to N7.441 trillion from the N7.29 trillion proposed by the presidency in December 2016.
FX: An unexpected event at the futures window yesterday, with the expiration of the June contract [$657mio], we saw a price change by the FMDQ/CBN. In an unprecedented move, the curve printed lower [increased discount]. Results of the Wholesale auction were released yesterday, with an estimated $100mio sold based on news report received.
FIXED INCOME: Though the bearish bias still persists across the curve, the direction of the fixed income market remains unclear in the short term. Bonds auction prints came in at 16.19% yield for all three tenors (down 10bps on average from the last auction). Most of the demand was on the Apr 2037s with extra N15bn re-allocated from the Mar 2027s. We expect the bond market to trend lower with the exception of the Jul 21s which has little or no interest from the street. Bill auction results are still expected. O/N closed at 20%.
U.K.: Bank of England chief economist Andy Haldane says he may vote for a rate rise in the second half of the year. He said leaving a rate hike until too late risks steeper rate rises in the future. Sterling briefly pushed above $1.27 after his comment, having dipped below $1.26 prior to Wednesday’s Queen’s Speech. Mr. Haldane’s comments are at odds to those made by Governor Mark Carney. On Tuesday Mr. Carney said “now is not yet the time to begin” rate rises. In August last year, the Bank cut interest rates to 0.25% after signs of a slowdown following the Brexit vote.
South Africa: South Africa’s top court will rule Thursday whether to order parliament to hold a secret vote on a motion of no confidence in PresidentJacob Zuma, a move that would enable disgruntled members of the ruling party to back his ouster without the risk of losing their jobs.
The opposition filed the no-confidence motion in Zuma, 75, in April after his decision to fire Pravin Gordhan as finance minister prompted S&P Global Ratings and Fitch Ratings Ltd. to cut the nation’s credit rating to junk. The United Democratic Movement petitioned the Constitutional Court after parliamentary speaker Baleka Mbete rejected its argument that since parliament chooses the president by secret ballot, it should be able to use it to remove him.
COMMODITIES: Talks this week in Vienna between OPEC and non-OPEC oil producers focused on how to deal with rising Libyan and Nigerian crude production, rather than deepening output cuts by other members, according to delegates familiar with the talks.
There wasn’t a serious discussion of making further production cuts at the meeting of the Joint Technical Committee — which comprises representatives of Algeria, Kuwait, Saudi Arabia, Venezuela, Russia and Oman — the delegates said, asking not to be identified because the talks were private.
Macro Economic Indicators
Inflation rate (Y-o-Y) for May 2017 16.25%
Monetary Policy Rate current 14.00%
FX Reserves (Bn $) as at June 16, 2017, 30.209
Money Market Highlights
30 Day 19.4827
90 Day 21.0012
180 Day 23.5317
USD 1 Month 1.21556
USD 2 Months 1.24944
USD 3 Months 1.28722
USD 6 Months 1.43961
USD 12 Months 1.72400
Tenor Maturity Yield (%)
91d 21-Sep-17 18.53
182d 21-Dec-17 19.05
364d 14-Jun-18 22.66
2y 29-Jun-19 16.53
3y 13-Feb-20 16.35
5y 27-Jan-22 16.16
Indicative Currency Exchange Rates
USDNGN 314.50 315.00
EURUSD 1.1064 1.1266
GBPUSD 1.2563 1.2765
USDJPY 111.03 111.06
GBPEUR 1.1240 1.1444
USDZAR 12.9142 13.1176
EURNGN 351.30 352.66
GBPNGN 398.45 399.85