The average yield on Nigerian Eurobonds fell below 10% as foreign portfolio investors boosted their involvement in the international capital market. In the United States, the yield on the 10-year Treasury note remains below 4% despite a falling consumer price index.
Analysts expect that African markets will see an influx of hot money on high-yielding sovereign assets in the coming month as the US Fed decreases interest rates.
The buying momentum in Nigerian sovereign Eurobonds was driven by the market’s anticipation that inflation would fall for the rest of the year, coinciding with the US Fed’s rate decrease.
Last week, purchasing interest at the short, mid, and long ends of the yield curve caused a 0.08% fall in the average yield to 9.95%. Cowry Asset Limited told investors.
Traders observed that activity was bearish at the start of the week after the US headline inflation dropped to 2.5% from 2.9%.
African bonds saw positive movement. Nigeria and Angola bonds both saw their prices increase. As a result, the average mid-yield on the Nigerian curve dropped.
In the new week, all eyes will be on the FOMC meeting as investors anticipate whether the Fed will decide on a 25 or 50 basis point rate cut.
According to the Bureau of Labor Statistics (BLS), headline inflation in the United States slowed by 40bps to 2.5% in August from 2.9%, marking the lowest printed since February 2021 when it settled at 1.7%.
This paved way for fed fund rates cut and Moody’s investors’ services has predicted 50 basis points reduction for Sept.
