…The Debt Management Office DMO postponed the July 2024 FGN bond auction in a circular released today, citing unforeseen circumstances as the reason for the action
SAT JULY 13 2024-theGBJournal| The Treasury bonds secondary market closed on a bearish note this week as most traders opened short positions ahead of this month’s bond auction.
As a result, the average yield increased by 49bps to 19.3%. Across the benchmark curve, the average yield expanded at the short (+123bps), mid (+69bps) and long (+5bps) segments due to profit-taking activities on the MAR-2025 (+329bps), JUN-2033 (+139bps) and JUN-2053 (+51bps) bonds, respectively.
We highlight that the Debt Management Office (DMO) postponed the July 2024 FGN bond auction in a circular released Friday, citing unforeseen circumstances as the reason for the action.
However, we do not envisage participants in the market to react negatively to this development, especially as the offer size and instruments remain the same.
Nonetheless, we maintain our medium-term expectation of elevated yields consequent to anticipated monetary policy administration globally and domestically and sustained imbalance in the demand and supply dynamics.
In this week’s analysis, the FGN Eurobond market experienced bullish sentiments.
This was driven by expectations that the Federal Reserve would increase its rate cuts from one to two by the end of the year, following a dovish report from Powell.
Additionally, the lower-than-anticipated US CPI data, which came in at 3.00% compared to the expected 3.10% and the previous month’s 3.30%, further supported this sentiment.
As a result, the average benchmark yield dropped by 30 bps, ending the week at 9.57%.
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