The Nigerian government Eurobonds’ average yield continued its decline as international debt market interest remained strong. A shift in the foreign debt market has led to bullish trading activity, with the US 20-year treasury yield maintaining a steady course despite anticipated rate hikes.
Before the upcoming US Fed speech, the 10-year U.S. Treasury yield exhibited a slight increase of 1 basis point, reaching 4.246%, as reported by Tradeweb. Jerome Powell’s speech is anticipated to provide guidance for the market’s trajectory.
In Jacksonville, European Central Bank (ECB) President Christine Lagarde is also scheduled to address market expectations. Notably, fixed income securities traders observed appreciation across all tracked maturities of FGN Eurobonds, resulting in a reduction of the average secondary market yield to 10.86%.
Within the local foreign exchange market, the Naira displayed strength against the US dollar at the Investors and Exporters (I&E) windows, with a trading rate of N771.69 compared to N773.43. Conversely, the parallel market experienced a 0.56% depreciation, lowering the value to N905 from N900.
Despite a weak demand projection, the oil market continued to exhibit bearish sentiment. Brent crude declined by 0.22%, settling at $83.03 per barrel, while WTI crude experienced a loss of 0.19%, reaching $78.74 per barrel. This downward trajectory in oil futures stemmed from the delicate balance between China’s economic recovery uncertainty, potential production increases from Iran and Venezuela, and a substantial draw in US crude inventory.
Shifting focus, gold’s value hovered around $1,916 per ounce (+0.12%), bolstered by an increasingly dovish sentiment due to disappointing US PMI data. This data exerted downward pressure on US treasury yields.
Long U.S. Treasury yields might see a slight rise from their current levels, as Jan von Gerich, Chief Analyst at Nordea, suggested in a note. Nordea’s analysis suggests that the Federal Reserve may not have completed its interest rate hikes and will maintain a tightening bias into the following year to ensure inflation aligns with the target. Therefore, Nordea posits that long U.S. yields could experience a modest increase in the near future.
