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T-Bills yield steadies as market awaits monetary policy outcome

By Olu Anisere

TREASURY bills yield steadied at the secondary market on Thursday as the market awaits the decision of the monetary policy committee of the Central Bank tomorrow.

Some analysts have predicted that the policy committee of the apex bank would likely sustain its accommodative stance but tone down its dovish stance in light of global developments.

While the fixed income market investors seek catalysts to upturn negative returns, key drivers of yields on securities appear to be against this expectation.

For the fifth time, the headline inflation rate slow down to 17.01per cent while the financial system liquidity has seen improved liquidity due to maturities inflows.

Due to better liquidity, the interbank rates decline significantly to a single digit, with both open buy back and overnight lending rates seen a heavy contraction.

Data from the FMDQ platform shows that open buy back declined 600 basis points on Thursday to close at 7 per cent. Similarly, the overnight lending rate contracted by 580 basis points to 7.8 per cent.

 Analysts see the absence of significant funding pressures on the system driving short term lending rates further, while this will also help to keep subscription level at primary auctions strong.

According to Cordros Capital, the Nigerian Treasury Bills secondary closed flat, as the average yield was unchanged at 5.5 per cent. Elsewhere, the average yield at the open market operations (OMO) segment expanded by 27 basis points to 6.4 per cent.

Analysts said trading in the Treasury bond secondary market ended on a bullish note, as the average yield contracted by 14 basis points to 11.3per cent.

Across the benchmark curve, it was noted that the average yield contracted at the short (-14bp), mid (-12bps), and long (-15bps) segments due to demand for the APR-2023 (-69bps), FEB-2028 (-20bps) and MAR-2050 (-53bps) bonds, respectively.

In a related development, the Nigerian local currency, the naira depreciated by 0.2per cent and 0.5 per cent to N413.07 and N565 at the Investors and Exporters window and parallel market, respectively.

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