Global Economy –Rundown:
The United State consumer spending for the month of January exceeded the previous month’s growth, as it grew by 2.4% compared to the dip of 0.4% recorded in December 2020. The encouraging consumer’s data for the month was attributed to the economic relief package availed to the low-income household as well as the reduced infection rate of the virus, this implies that the United State economy is favourably poised for growth in the first quarter of 2021. The consumer spending growth for the month is the largest increase since last April, also this growth has propelled by some level of optimism towards manufacturing output, building permits, and home sales, also, increased customers activity was recorded within the automobile industry, recreation, goods, food and beverages, and increased spending on services such as hospitability. However, the economic shock caused by winter storms that confronted Texas and other parts of the densely populated South this month is expected to lower the momentum of growth in consumer spending for the month of February.
Domestic Economy –Rundown:
The Fitch Rating Agency downgraded it’s 2021 projection for the Nigerian economy from 2.3% to 1.6%, this review was propelled by the weak base of the recent GDP report that indicates a shallow recovery attained by fourth-quarter GDP growth, as the economy remains submerged with inflationary pressures and high rate of unemployment. These cautionary indicators are expected to affect the country’s consumer spending and business investment pattern, as producer’s propensity to take on additional investment would be hampered, as they will remain cautious about transferring further cost to consumers, whose disposable income have been eroded through inflationary pressure. The agency also raised concern about the state of insecurity in the country and has warned that if this should extend beyond the current hotspot, this may hinder the effectiveness of vaccine distribution that may further impede on the economic performance of the country. However, the upside of the country’s economy for the fiscal year is expected to be the Oil sector, as the agency has projected that the Country’s net oil export would grow by 42.5% that will be attained if the current price uptick is sustained, also, this sector is expected to be the main driver of real GDP expansion for the year.
The Naira contracted by 0.06% at the I&E FX window to settled at N410.25/USD, also at the parallel market, Naira dipped to N482.00/USD.
The equities market closed the month on a bearish note as the NSE ASI monthly growth indicated a contraction of (6.16%), also, weekly performance indicated a dip of (0.96%) and the YTD ASI growth contracted to (1.21%). The weekly average sector performance of the NSE indices declined to 1.39%, which was driven by a 4.94% contraction in the NSE Insurance index.
The system liquidity at the end of the week was N565.8billion, as corresponding open buyback rate and overnight rates declined to 5.70% and 6.30% respectively.
T-Bills secondary market activities maintained its bullish sentiment as the average yield declined by 2bps to 1.41% for the week, and at T-bills auction for the week, yield increased by 100bps, 150bps, and 150bps across the 91days, 182days, and 364days maturity to a new clearing rate of 2.00%, 3.50%, and 5.50% respectively.
The Bond secondary market returned bullish, as the average yield for the week declined by 35bps to 10.15%, as yield across major maturity spectrum declined.