Global Economy –Rundown:
As the transition period between Britain and the European Union elapses, the post bilateral trade relationship between them still hangs in the balance, as critical issues around fishing, state aid, and how future disputes should be resolved, and both parties playing tough guy as the transition date of 31st December, 2020 inches closer, while Britain as stated that it will not be pushing for an extension to this date. While one of the contentious issue, as regards fishing, is of lesser economic value, given that it contributes only 0.1% to the United Kingdom GDP. A Brexit deal is of importance, as this will safeguard trade deals to the tune of $1trillion and strengthen peace between Britain and Northern-land, as the latter is of importance, so as to uphold the 1998 U.S.-brokered Good Friday Agreement that ended three decades of sectional conflict in Northern Ireland. While in the event that a no-deal Brexit occurs, then this will then propel stringent economic uncertainty in both the United Kingdom and among the Union States that will cut across border conflicts, financial market, and supply chain disruptions that may further amplify the economic crisis across the globe.
Domestic Economy –Rundown:
The Apex Bank monetary committee maintains its key monetary policies at par with its previous communique, where MPR was retained at 11.5%, CRR retained at 27.5%, Liquidity Raito maintained at 30%, and the asymmetric corridor around the MPR was maintained at +100/-700 basis points. In reaching the above decision, the committee considered other alternatives of either loosening or tightening the benchmark lending rate, while the latter option was not considered as this will exact some downward pressure on the path to recovery from a technical recession given the second quarter consecutive decline in the nation’s GDP readings, and as for the former, this was also not considered because the ripple effect of such will induce excess liquidity that would further elevate the inflationary pressure of the economy and hamper the strength of the Nation’s currency.
Currency:
The Naira dipped for the week, as the exchange rate at the I&E FX window settled at N390.25/USD, while at the parallel market, Naira depreciated in value to N495/USD.
Equities
The equities market week-on-week performance indicated a 2.19% growth, and the YTD ASI grew to 29.97%. The sector performance of the NSE indices maintained a positive rally for the week, as the average change of the NSE Indices was 0.70%, based on the indices monitored, which was sustained by significant growth recorded from NSE Industrial index.
Fixed Income:
The system liquidity at the end of the week rebounded, as both open buyback rate and overnight rates decrease to 1.25% and 1.50% respectively.
T-Bills secondary market activities was dovish as the average yield remained unchanged from the previous week’s yield of 0.09% for the week. The Primary auction clearing margin rate across the maturity spectrum was; 91-days-0.21%, 182days-0.09%, and 364days- 0.15%
The Bond secondary market, activities maintained its bullish sentiment, as the average yield for the week dipped by 13bps to 4.72%, as yield declines were recorded between the short-dated and long-dated maturity.
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