Prior to the expected release of the June inflation report, the average yield on Nigerian Treasury bills decreased in the secondary market. Because of base effects, the market anticipates a slowdown in the rate of inflation this month.
Following the apex bank auction on Wednesday, buyers’ interest in the fixed-income market soared among investors and licensed dealers. Amidst anticipation of yield repricing, investors looking to fill lost bids at the primary market auction drove the most recent Treasury bills market.
Data from the FMDQ platform shows that although the short-term benchmark interest rates decreased, the level of liquidity in the financial sector remained tight.
Opening system liquidity stayed short as banks maintained a borrowing spree at the Central Bank of Nigeria’s (CBN) standing lending facility for funding. However, the open repo rate eased by 35 bps to 31.75%, while the overnight rate decreased by 16 bps to 32.60%.
The average yield declined in the short (-59 bps), mid (-1 bps), and long (-2 bps) segments due to demand for the 63-day maturity, which caused the short-dated instrument’s yield to dip by -346 bps. Also, the market experienced buying interest at the belly of the curve, and demand for 147- days to maturity caused the associated yield to decline by -2 bps.
At the long end, there was demand for 350- days to maturity while its associated yield dropped by -2 bps. Similarly, the average yield dipped by 2 basis points to 24.3% in the OMO segment in the secondary market.
