The degree of activity in Nigeria’s sovereign Eurobonds market was encouraging. In order to trade sovereign assets, foreign investors raised their wagers on Nigeria’s US dollar bonds on the international capital market.
Consequently, the price of Nigeria’s Eurobond increased, causing the yield curve to decline. Because of the economic uncertainty, the market shifted from the prior risk-off attitude toward Nigeria’s sovereign assets to a positive one.
The debt market report followed states that following strong demand for a $42 billion 10-year note auction, rates on US government paper closed almost flat on Wednesday afternoon.
The yield on the 2-year Treasury increased by 1.4 basis points from Tuesday’s closing rate of 4.406% to 4.420%. The 10-year Treasury’s yield increased by 1.7 basis points to close at 4.108% , versus 4.091% on Tuesday.
The yield on the 30-year Treasury advanced 1.3 basis points to settle at 4.309%, from 4.296% on Tuesday. Buy sentiment was evident across all ends of the yield curve, leading to a decline in the average yield by 16 basis points to 9.93%, Cowry Asset Limited said in an update.
At its latest policy meeting, the US FOMC kept the Fed funds rate unchanged at 5.25% – 5.5%, and the US Fed signal rate cut may be impracticable in the short term.
The committee pushed back against market expectations of rate cuts in March 2023, stating that rates a likely to remain elevated until they have gained greater confidence that inflation (currently 3.4%) is moving sustainably toward the 2% target.
Looking ahead, the committee stated that it would be prepared to adjust the stance of monetary policy if risks that could impede the attainment of its goals emerge. In the secondary market for FGN Bonds, trading on Wednesday exhibited slight bullish results. The average yield declined by 2bps to close at 15.30%.
