FCSL WEEKLY MARKET REPORT_21ST DECEMBER,2020

Global Economy –Rundown:
Federal Reserve’s sustained its position in attaining price stability and full employment in propelling the United State economy through the challenging time, while it acknowledges that the pandemic still weighs on economic activity, employment, and inflation that poses a medium-term risk to the economy. The Fed resolve to retain the accommodative stand of its monetary policy, as it held on to its target benchmark rate range of 0%-0.25%, long term inflation and employment targeted at a rate of 2%, and continued Treasury securities purchase to the tune of $80 Billion monthly. The anticipated impact of this monetary easing will be to support effective and efficient market functioning that will enhance the smooth flow of credit to households and businesses.
 
Domestic Economy –Rundown:
The consumer price index for the month of November maintained its elevated pressure as the index for the month was 14.89%, which represents a 0.66 percentage change from the previous month’s Consumer Price Index of 14.23%. The connecting index to the Consumer Price Index, returned elevated indices for the month, the food item inflation and Core inflation both appreciated to 18.30% and 11.05%. The persistent rise in Consumer Price Index, is associated with structural clefts associated with disrupted farming cultivation and harvesting, also hike in electricity tariffs, increased Premium Motor Spirits, and prolonged border closures remain the major propelling factors for an elevated inflationary pressure. However as some of the structural issues, in the area of border closure, now reopened, we anticipate a marginal ease off of inflationary pressure, while impeding risks from disruption to economic activity given the second wave of the pandemic, still persist.
Currency:
The Naira closed flat for the week, as the exchange rate at the I&E FX window stood at N394.00/USD, while at the parallel market, Naira dipped by 0.42% to N477/USD.
Equities
The equities market week-on-week performance indicated a 7.46% growth, and the YTD ASI grew to 37.12%. The sector performance of the NSE indices was also on a bullish rally, as the average change of the NSE Indices was 6.13%, based on the indices monitored, which was propelled by a significant rise recorded from NSE Insurance index.
Fixed Income:
The system liquidity for the week ebbed as both open buyback rate and overnight rates increased to 4.50% and 4.50% respectively.
T-Bills secondary market activities was bullish as the average yield dipped by 8bps to 0.36% for the week, while at the primary auction, the marginal rate for maturity date of 91days, 182days, and 364days were 0.05%, 0.50%, and 1.14% respectively.
The Bond secondary market, activities was bearish, as the average yield for the week firmed up by 38bps to 6.09%, as yield appreciated around the medium-term bond. The clearing yield at the Bond auction of 15 years and 25 years maturities were 6.95% and 7.00% respectively.
 

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