SAT 04 SEPT, 2021-theGBJournal- Bullish sentiments persisted in the Treasury Bonds secondary market as investors continue to cherry-pick attractive instruments across the curve.
Specifically, the average yield declined by 11bps to 11.0%. Across the benchmark curve, the average yield declined at the short (-10bps), mid (-9bps), and long (-12bps) segments following investors’ interest in the JAN-2022 (-53bps), FEB-2028 (-15bps) and MAR-2035 (-35bps) bonds, respectively.
Next week, we maintain our expectations of lower average yields in the face of limited supply and deliberate efforts by the DMO to moderate borrowing costs for the government.
At the Money market, the overnight (OVN) rate expanded by 500bps w/w to 13.5%. The rate remained in the single-digit territory for most of the week following a higher net liquidity position (this week’s average: NGN373.87 billion vs last week: NGN43.46 billion) supported by OMO maturities (NGN57.00 billion).
However, the eventual expansion was driven by debits at the latter part of the week for CRR and the CBN’s weekly FX and OMO (NGN50.00 billion) auctions.
In the coming week, we expect the OVN rate to remain relatively range bound as expected inflows from OMO maturities NGN170.00 billion is likely to offset funding pressures for CBN’s weekly auctions.
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