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Bears feast on treasury bonds as average yield expanded by 6bps to 7.4%, CBN’s weekly OMO auction puts pressure on liquidity

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THUR 28 JAN, 2021-theGBJournal- The Treasury bonds secondary market maintained its bearish stance, as average yield expanded by 6bps to 7.4%. Across the curve, average yield contracted at the short (-6bps) end, following buying activity in the JAN-2022 (-86bps) bond, and expanded at the mid (+34bps) segment, due to profit-taking on the APR-2029 (+48bps) bond; the long end was flat.

MONEY MARKET: The overnight lending rate expanded by 450bps to 10.0%, as outflows for CBN’s weekly OMO auction pressured the liquidity in the system.

The NTB secondary market was bearish, as average yield expanded by 50bps to 1.1%. Across the curve, average yield was higher across all the tenors – short (+28bps), mid (+30bps) and long (+76bps) – due to upward repricing of the 14DTM (+49bps), 182DTM (+63bps) and 259DTM (+107bps) instruments, respectively. Elsewhere, trading at the OMO segment (average yield flat at 1.6%) was relatively quiet, as market participants positioned for renewed supply at the primary market.

Currency: The naira was flat at the I&E window and parallel market at NGN394.33/USD and NGN478.00/USD, respectively.

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