The consumer price index, (CPI) which measures inflation increased by 14.89 percent (year-on-year) in November 2020. This is 0.66 percentage points higher than the rate recorded in October 2020 (14.23 percent).
Increases were recorded in all COICOP divisions that yielded the Headline index.
On month-on-month basis, the Headline index increased by 1.60 percent in November 2020. This is 0.06 percentage points higher than the rate recorded in October 2020 (1.54 percent).
The percentage change in the average composite CPI for the twelve months period ending November 2020 over the average of the CPI for the previous twelve months period was 12.92 percent, representing a 0.26 percentage point increase over 12.66 percent recorded in October 2020.
The urban inflation rate increased by 15.47 percent (year-on-year) in November 2020 from 14.81 percent recorded in October 2020, while the rural inflation rate increased by 14.33 percent in November 2020 from 13.68 percent in October 2020.
On a month-on-month basis, the urban index rose by 1.65 percent in November 2020, up by 0.05, from 1.60 percent recorded in October 2020, while the rural index also rose by 1.56 percent in November 2020, up by 0.08 from 1.48 percent recorded in October 2020.
The corresponding twelve-month year-on-year average percentage change for the urban index was 13.65 percent in November 2020. This is higher than 13.29 percent reported in October 2020, while the corresponding rural inflation rate in November 2020 is 12.35 percent compared to 12.09 percent recorded in October 2020.
It was quite an active day in FGN bond space, although the market trades’ chunks were closed by the later part of the day. Market activity flowed from the belly to the curve’s tail with transactions ranging between 7.10%-7.15% for the mid-dated bonds and 7.45-7.55 for the long. The market was also interested in the SUKUK bond, especially the 2027 maturity, although the bid/offer stood apart at 5.50%/5.15%, making it difficult to close.
The short end of the curve has been quiet in recent times. However, the market saw some order-driven bid for the 2026s paper as its bid started off the day at 5.35% but gradually drop by 15bps albeit small volume met this bid for a trade.
We expect the trading rush to slow significantly tomorrow as market participant’s attention shifts to the FGN bond auction scheduled to hold tomorrow.
Treasury Bills
For T-bills, the market witnessed an order-driven rush for the last issued 1yr NTB bill (09 Dec maturity) with bids ranging between 0.65-0.70 as the market ignored the similarly traded OMO bill (07 Dec Maturity) despite been offered better at 1.00%.
We also saw a bit of interest in the Jan-Mar bill, which became an unexplainable scare in the market despite been offered at a 0.30% level during yesterday’s trading session. Nonetheless, we saw a slight movement on the NTB curve, which compressed slightly by 1bps.
We expect a less active day tomorrow, as dealers would most likely be interested in the NTB auction outcome, especially for the 1yr bill.
Money Markets
Interbank rates remained low, supported by excess system liquidity levels. The markets opened c. N668.12BN, 74.60% higher than the previous session as inflows from OMO repayments hit the system, consequently pushing rates down to close at 0.63% and 0.94% for OBB and OVN rates, respectively.
We expect rates to stay at these levels for tomorrow since the market does not foresee any significant outflow that may push rates north.
FX Market
The FX market was reasonably stable today as the rate stayed unchanged on all the market segments, although the FX sales from CBN recently at the IEFX were expected to have calmed rates slightly at the cash/transfer window.
Eurobonds
It was a quiet session for the NIGERIA Sovereigns today, as sentiments were mixed across the sovereign curve. Demand persisted on the 2025s and 2027s papers, while offers at the long end increased. Sub-Saharan African sovereign papers closed the session slighter stronger, led by the ANGOLA papers.
The NIGERIA Corporates had another quiet session, with the significant mover been the SEPPLN 2021 bond shedding c.8bps.
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