RMB: T-Bills demand to moderate on lower rates

Rand Merchant Bank's Senior Fixed Income and FX Trader, Ademola Olayiwola, recently discussed the current state of Nigeria's fixed-income market and the impact of the Central Bank of Nigeria's (CBN) intervention in a CNBC Africa interview. Olayiwola highlighted the CBN's unexpected move to sell $876 million to the interbank market as a major development. This intervention, aimed at stabilizing exchange rates and boosting market confidence, was well received by market participants despite its surprising nature. The discussion also touched on the upcoming August bond auction, with analysts predicting a decline in yields. Olayiwola noted the importance of market liquidity and sentiment in determining the success of auctions, emphasizing the need for careful timing to ensure favorable outcomes. The DMO's decision to postpone the auction to next week was influenced by the recent CBN intervention's impact on market liquidity. Furthermore, the conversation delved into the Federal Government savings bonds offer and the expectations for the retail market. The savings bond serves as a tool for targeting retail investors and diversifying the market's investor base. While the savings bonds may not significantly impact market direction, the focus remains on the main FGN bond auction scheduled for next week. Olayiwola also shared insights on the anticipated July inflation data, projecting a potential decline. With a base effect likely to influence the inflation numbers, analysts are optimistic about the possibility of the first decline in 19 months. The CBN's monetary policy adjustments have helped tighten the market without resorting to significant rate hikes, signaling a strategic approach to managing economic challenges. In summary, Nigeria's fixed-income market is experiencing notable shifts in response to CBN interventions, upcoming bond auctions, and inflation trends. Market participants are closely monitoring these developments to gauge the market's direction and potential opportunities for investment.