The average yield on Nigerian government Eurobonds fell by seven basis points as a result of recent portfolio repositioning to maximise profits while central bankers maintain high interest rates.
The rising demand for Nigerian US dollar-denominated bonds reflected expectations that the current reform will boost local economic development in 2024.
Some economists are predicting an increase in demand for the Nigerian US dollar when the Federal Reserve lowers interest rates and inflation pressures lessen. On Wednesday, the United States’ core inflation rate fell to 3.6% in April. Despite several economic constraints, the IMF expects macroeconomic conditions to improve this year.
The apex bank is expected to hike rate next week at its monetary policy committee meeting due to accelerating inflation rate. Latest report from the statistics office showed that inflation rate climbed to 33.69% in April, with negative impacts on purchasing manager index.
In the sovereign Eurobonds market, buy-interest was evident across all segments of the yield curve, resulting in a decline in the average yield by 0.07% to 9.77%, Cowry Asset Management Limited told investors via email note.
2Y US Treasury yields fell three basis points to touch a six-week low of 4.705%. 10Y US treasury yields, which dropped nine bps on Wednesday, fell a further four bps to 4.313%, also a six-week low.
On Wednesday U.S. core inflation slowed to 3.6% in April. That was in line with market expectations but taken by traders as an encouraging signal after a few months of stickiness.
10Y Eurozone bond yields, which fell sharply in the wake of U.S. inflation data, continue to decline, with the 10-year Bund yield trading almost 2 basis points lower at 2.407%, according to Tradeweb. In the secondary market for FGN Bonds, trading activity was on naira asset closed slightly on a mixed note. However, the average yield stayed muted at 18.64%.
