Here’s what to expect in fixed income market today

The fixed income market, especially the Nigerian Treasury Bills (NT-Bills) segment is expected to observe a quiet session today as players await the outcome of the NTB auction where N141.26 billion, which is on offer by the Debt Management Office (DMO), according to a report by Parthian Partners, Africa’s premier inter-dealer broker.

The Central Bank of Nigeria (CBN) will today on behalf the Federal Government conduct a Primary Market Auction (PMA) to roll over treasury bills maturities worth Ñ141.26 billion across 91-day (N2.19 billion), 182-day (N6.95 billion), and 364-day (N132.12 billion) tenors.

Activity in the treasury bill market yesterday was skewed to demand for short end papers, including the May Special bills, as participants anticipate higher yields at the PMA scheduled for today. Few trades were executed by the close of the market, and yields closed approximately flat on the day.

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The Overnight (O/N) rate decreased by 2.62 percent to close at 5.62 percent on Tuesday as against the last close of 8.24 percent on Monday.

In the same vein the Open Repo (OPR) rate decreased by 2.42 percent to close at 5.25 percent on Tuesday compared to 7.67 percent on the previous day.

As system liquidity has improved with Open Market Operation (OMO) repayment of N48.47 billion, the money market rates are likely to remain subdued, barring any mop-up activity by the CBN, analysts at FSDH Research said in a report.

In the OMO bills market, the average yield across the curve closed flat at 3.42 percent. Average yields across short-term, medium-term, and long-term maturities remained unchanged at 3.01 percent, 3.37 percent, and 3.93 percent, respectively.

At the foreign exchange market on Tuesday Naira appreciated by 0.09 percent as the dollar was quoted at N416.62 as against the last close of N417.00. Most market participants maintained bids between N410.00 and N444.00 per dollar.

The bond market maintained the bearish trend in yesterday’s session, with trade activity skewed to the belly of the bond curve. The 2036s, 2037s, 2026s and 2035s were the most traded papers on the day, with yields closing 1bp higher on average.

“We expect the bearish trend to continue today, as investors continue to demand even higher yields,” analysts at Parthian Partners said.