…The FGN Eurobond Market made quite a comeback during the week with oil off its lows as well
SAT SEPT 14 2024-theGBJournal|The FGN bonds secondary market turned bearish this week, as most traders opened short positions ahead of this month’s inflation data and bond auction.
Thus, the average yield inched higher by 15bps to 18.8% by close of trading on Friday.
Across the benchmark curve, the average yield expanded at the short (+15bps) and mid (+24bps) segments driven by sell pressures on the MAR-2025 (+147bps) and FEB-2031 (+53bps) bonds, respectively, while it declined at the long end (-4bps) following demand for the JAN-2042 bond.
Notably, the DMO postponed the September 2024 FGN bond auction to 23 September due to the public holiday on Monday.
We expect quiet proceedings in the secondary market as investors adjust their portfolios in anticipation of the upcoming auction. Meanwhile, we maintain our medium-term expectation of elevated yields consequent on anticipated monetary policy administration globally and domestically, and sustained imbalance in the demand and supply dynamics.
FGN Eurobond Market
The FGN Eurobond Market kicked off the week on a bearish note ahead of inflation data as investors continue to debate over the potential size of the rate cut at the next FED meeting.
The United States CPI data which printed at 2.5% vs 2.6% forecast and 2.9% previous did little to change market sentiments.
The FGN Eurobond Market made quite a comeback during the week with oil off its lows as well. This was also fueled by the United States Producer Price Index (PPI) data which remained unchanged at 2.4% against 2.5% forecast.
Also, the initial Jobless Claims printed at 230K as expected against 228K prior. Also, the Michigan Consumer Sentiments Index printed at 69 vs. 68 expected and 67.9. Week-on-week, the average benchmark yield appreciated by 3bps to close at 9.74%.
We expect a sustained bullish movement ahead of the Fed meeting.
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