Global Economy

• According to the Labor Department, U.S. consumer price index) for January surged to 7.5% Y-o-Y, a 41-year high raising the possibility of an aggressive 50 basis points rate hike in March. The data also revealed that Core Inflation was 6% Y-o-Y meanwhile both headline and core CPI rose by 0.6% on a month-on-month basis. Following the latest inflation data, Goldman Sachs predicted seven consecutive 25bp rate hikes at each of the remaining Federal Open Market Committee meeting in 2022. There were strong increases in electricity prices jumped 4.2%, which offset cheaper gasoline and natural gas.
• Official data from the ONS shows that the UK economy rebounded as gross domestic product grew FY2021 by 7.5% following a 9.4% fall in the previous year, according to new data from the Office for National Statistics today. Data also shows that the country’s GDP managed a 1% growth in the final quarter of the year despite being affected by the spread of the Omicron variant. Analysts forecast a growth of 4.7% in 2022.
• Figures from Ireland’s Central Statistics Office (CSO) show that while new car sales in January fell almost 7% compared to the same month last year, 21% of the 15,814 new private cars licensed last month were electric or plug-in hybrid electric vehicles. Specifically, the share of all vehicles that are new electric cars increased was 11.5% in January 2022suggesting a steady decline in the fraction of Ireland’s licensed vehicles that are diesel powered.
• According to official trade data, U.S. trade deficit jumped 27% in 2021 hitting a record $859 bn largely due to recovering economy increasing Americans’ demand for imports. Analysts suggest that the spike in Imports was due to higher prices associated with sustained inflation. Trade deficits rose by 1.8% in the month of December 2021 reaching $80.7 bn the second largest monthly increase ever. Economists polled by The Wall Street Journal had forecast a $82.9 bn shortfall. Americans imported autos, food, computers, cell phones, toys and medical supplies. The U.S. trade deficit with China advanced to $355 bn last year from $310 bn in 2020 despite existing sanctions.

Nigeria Economy

• In a statement issued from its headquarters in Washington D.C. on Monday, the International Monetary Fund (IMF) said Nigeria’s economic recovery was associated with accommodative government policy support, rising oil prices and international financial assistance. Meanwhile, the IMF estimates a 3%   Real GDP Growth FY2021.The Fund noted that Nigeria’s headline inflation declined from 18.2% in March to 15.6% in December, supported by the new harvest season and opening of land borders.
• Nigerian importers have reacted with disapproval to the new e-invoicing policy of the Central Bank of Nigeria which requires foreign suppliers to register on a CBN portal and a pricing system regulated by the bank. According to the Importers, the new policy would complicate trade and result in inflation. The CBN had in January announced new guidelines for international trade, asking importers and exporters to submit e-invoice of all their transactions in place of hard copies they submitted before.
• PAN-African corporate and investment bank, Absa, expressed optimism over the transformative economic growth opportunities inherent in Nigeria’s adoption of 5G technology. According to the Bank the National Policy on 5G Networks which was officially launched by the Federal Government as driver of its digital economy agenda on January 25, 2022, would create jobs in the economy, improve operational transparency, drive sectoral productivity and expand the fight against insecurity.
• An extended technical problem has forced several Nigerian government websites to remain shut for weeks. Websites of the presidential office and the National Identity Management Commission were affected as of Tuesday, other affected sites were those of the Budget Office of the Federation, Open Treasury, Nigeria Civil Aviation Authority (NCAA), Nigeria Police Force (NPF), and the Office of the Secretary to the Government of the Federation (OSGF).
•  In its 2021 investment announcement report, the NIPC stated that the economy drew $23.3 bn compared to the $16.7 bn recorded in 2020. According to government department, the increase in value indicates the growing confidence of investors in the efforts to improve the national investment landscape. NIPC noted that Lagos, Bayelsa, Delta, Akwa Ibom and Adamawa reported the biggest investments in value terms, attracting $8.7 bn, $3.6 bn, $2.9 bn, $2 bn and $1 bn respectively.

Review and Outlook

The concerns of Importers about the newly introduced e-invoice policy introduced by the CBN dominated discussions of trade experts and Macro-economic analysts in the  week gone-by. While the Importers canvass a strong argument against what appears to be a sudden introduction of an electronic invoicing policy which in their view would worsen the already complex trade procedure in Nigeria, some trade experts expressed a contrarian view, choosing to see the decision as a follow-up on the already digitized process of applying for the form ‘M’. They highlight the long-term benefits of digitizing the invoicing process namely: the elimination of forex round tripping through over invoicing as well as the simplicity that ultimately comes with a digitized process.

Meanwhile, attention would shift next week to the release of Nigeria’s Inflation Data for the month of January. Also, next week the US Federal Reserve’s FOMC minutes, UK and China inflation data for January are all billed for release. The eurozone and Japan will both disclose fourth-quarter GDP figures this week, while the United States will reveal retail sales, industrial output, and PPI statistics. US Federal Reserve FOMC minutes also comes in focus next week while the UK and China’s January inflation statistics would come in as well. The eurozone and Japan will both disclose fourth-quarter GDP figures next week.

Energy Report

Domestic

• Many filling stations were shut on Monday partly due to the NNPC recall of 100million litres of adulterated imported petrol and partly due to the gradual halt in operations by truck owners. With shortages in supply of the product across Abuja, Lagos, and other neighbouring states, there were long queues by motorists in the few outlets that dispensed the product.
• The GMD of NNPC Limited, Mele Kyari, on Wednesday, issued a statement that fingered some of the contractors it engaged to swap crude for petrol as culprits in the importation of the adulterated petrol. The contractors were quick to deny responsibility for the incident as they accuse the corporation of playing fast and loose with the truth.
• The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), on Tuesday, said a limited quantity of PMS with methanol quantities above Nigeria’s specification was discovered in the supply chain and effort has since been put in place to isolate and withdraw the affected products from the market.
• The President of the Nigerian Gas Association (NGA), Ed Ubong, has called on the Federal Government to deregulate the gas value chain in the country to encourage more investments in the sector.
• The Nigerian National Petroleum Corporation (NNPC) Limited has disclosed that it made about N2.613 trillion from the sale of petrol between August 2020 and August 2021.
• The Organization of Petroleum Exporting Countries (OPEC) Monthly Oil Market Report (MOMR) for February reveals that Nigeria’s crude production increased from 1.197 mb/d in December to 1.399 mb/d in January 2022, based on direct communication. A similar increase was recorded in the country’s oil production based on secondary sources.

Foreign

• Oil prices bounced around on Monday in see-saw trading, with some investors taking profits after signs of progress in the U.S.-Iran nuclear talks while others kept bullish sentiment bolstered by rising consumption amid ongoing supply constraints.
• U.S. President Biden on Monday warned that the Nord Stream 2 gas pipeline would be halted if Russia invades Ukraine and emphasized his unity with German Chancellor, Olaf Scholz, as the West seeks to deter war in Europe.
• The recent increase in oil prices above US$90 per barrel is pushing the Biden administration to talk with major oil-producing and oil-consuming countries to tackle the high oil prices. The statement from the White House (WH) spokeswoman noted that the WH is in talk with oil-producing countries to increase production and with oil-consuming countries to release from their strategic reserves.
• JPMorgan has warned that Brent crude price could easily reach US$120 per barrel if the geopolitical conditions between Russia and Ukraine worsen.
• The global supply of diesel is struggling to keep up with the rapid post-pandemic demand recovery, thereby sending the price of diesel soaring in the international market.
•  The latest OPEC’s MOMR reveals that the organization revised up its annual oil demand estimate by 10,000 b/d for 2022 to 100.8 mb/d from 100.79 mb/d in last month’s report. The cartel is quite optimistic about the global economic recovery.
• Oil prices eased on Friday as hot U.S. inflation fanned worries about aggressive interest rate hikes and investors await the outcome of U.S.-Iran talks that could lead to increased global crude supply. The benchmark oil prices are on track for their first weekly decline after seven consecutive weekly gains, though both contracts had earlier climbed to a seven-year high.
• Brent had a weekly decline of -0.05% (see Table 1).

Metals

Gold inched upwards by +1.70% while Silver also depreciated by +3.77% W-o-W (see Table 1).

Agriculture

• Cocoa prices climbed by +3.26% W-o-W.
• Corn prices grew by +4.87% W-o-W while Sugar dipped by -2.31% (see Table 1).
  
  

Table 1: Weekly Change in Commodity Prices

Commodity	11-Feb-22	04-Feb-22	31-Dec-21	Weekly Chg	YTD Chg
Brent	93.14	93.19	78.54	-0.05%	18.59%
Gold	1836	1805.3	1827.1	1.70%	0.49%
Silver	23.245	22.4	23.27	3.77%	-0.11%
Cocoa	2818	2729	2546	3.26%	10.68%
Corn	646.25	616.25	595.5	4.87%	8.52%
Sugar	17.77	18.19	18.83	-2.31%	-5.63%
Source: CNBC,

*Data for 11^th February 2022 is as of 5:21pm (Nigerian Time)

Outlook

• In the coming week, oil prices are expected to continue the price surge as demand outpaces supply
• Gold price is expected to climb in the coming week as demand for the precious metal increases
• Cocoa prices are expected to appreciate in the coming week as demand still outpaces supply in the global market amid concerns of dry weather affecting top producers such as Ivory Coast’s supply
• Sugar prices are expected to appreciate in the coming week with elevated crude oil prices weighing in oil it price.
• Corn prices are expected to continue its price surge as higher demand would weigh in on prices.

Fixed Income and Money Market 

Currency Market

The Central Bank of Nigeria (CBN) has revealed this week it will stop the sale of foreign exchange to Deposit Money Banks by the end of the year.

The CBN Governor, Godwin Emefiele said banks must begin to source their forex from export proceeds, hence the need to support non-oil exporters in the country.

He pointed out that the decision was in line with the apex bank’s new commitment to boost the country’s foreign reserves through proceeds from non-oil exports. For more information on this, read CBN Announces RT200 FX Programme.

The Naira depreciated for most trading sessions at the I & E FX Window this week.

On a week-on-week (W-on-W) basis, the Naira closed at N416.67/US depreciating by -0.08%, at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it also depreciated by -0.07%.

Average Benchmark Yields
	04-Feb-21	10-Feb-21	% Change
I & E FX Window	416.33	416.67	-0.08%
NAFEX ($/N)	416.07	416.37	-0.07%

Source: FMDQ

Money Market

Multiple liquidity inflows pushed money market rates to single digits threshold, for the most part, this week.

At the close of the trading on Thursday, open repo (OPR) and overnight rates (O/N) settled at 1.17% and 1.50% respectively indicating a W-o-W fall of -91.00% and -86.68%.

Money Market Rate
	04-Feb-21	10-Feb-21	% Change
OPR (%)	13.00	1.17	-91.00%
O/N (%)	13.25	1.50	-86.68%

Source: FMDQ

We expect rates to hover around current levels barring any significant outflows from the Apex bank.

Treasury Bills Market

The Nigerian Treasury Bills market was quiet for most of the session this week, with average benchmark yields remaining unchanged, except for Tuesday’s trading where we saw massive interest on the August 22 maturity.

At the close of trading on Thursday, the market was bullish with buying interest seen both at the NT Bills and OMO Bills. Average benchmark yields for T. Bills fell by -2.21%, yields on OMO bills also edged up by -0.18%.

Average Benchmark Yields
	04-Feb-21	10-Feb-21	% Change
T. Bills (%)	4.53	4.43	-2.21%
OMO Bills (%)	5.68	5.67	-0.18%

Source: FMDQ

We expect activity next week to be weak depending on the market liquidity situation. 

The DMO sold N214.96 billion worth of notes against N98.02 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.48%, 3.30%, and 5.20%, respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 20bps.

FGN Bond Market

The local bond market was mixed, with the market having a seesaw trend this week.

At the close of trading on Thursday, the market closed mixed. Overall average benchmark yields closed at 11.51%, benchmark yield dipped by -0.26%.

Average Benchmark Yields
	04-Feb-21	10-Feb-21	% Change
Short Tenor	7.79	7.54	-3.21%
Mid Tenor	11.02	10.91	-1.00%
Long Tenor	12.45	12.48	+0.24%

Source: FMDQ

 FGN Eurobond Market

The Eurobond market started the week on a bearish note, as expectations of aggressively hawkish monetary policies actions in the U.S. weakened market sentiment caused by the continuous rise in the country’s inflation. The average benchmark yield rose marginally by 1bp to 6.64%.

Nigerian Capital Market

• The Nigerian bourse started the week on a negative note while market sentiment bearish, albeit with occasional bargain hunting. The NGXASI closed the week on a negative note with a decline of -0.16%. The Nigerian Exchange lose N4182bn. However, year-to-date return was positive at +10.50%, while the market capitalization settled at N25.43trillion.
• Sectoral performance across sectors tracked was mixed, at the close of trading on Friday, NGX-AFRHDYI was the highest gainer for the week with +4.78% while NGX- ASeM recorded the highest decline with -1.30%. NGX-Banking NGX-MERIVAL closed the week with +2.34%, +2.03%, respectively.
• Market breadth for the week closed positive with 19 gainers led by GUINNESS  as against16 losers led by PHARMDEKO and NEM

Chart 1: Movement of NSEASI Index Points 4 FEB 2022- 11 FEB. 2022

NASD OTC  

The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a positive movement in Market capitalization and NSI.  The NSI and Market capitalization closed the week 751.43 points and N636.29bn with rise of +1. 27% and +1.27% respectively.

Dangote and Elumelu Index   

Dangote Index closed the week positive with 143.79 basis points from 143.76 basis points recorded the previous week, representing a rise of 0.02%.

DANGSUGAR   recorded a rise of +0.57%. respectively NASCON DANGCEM  closed flat.

Table 2: Dangote Index W-o-W Change

Company	4-Feb-22	11-Feb-22	WoW Chg
DANGCEM	274.80	274.80	0.00%
DANGSUGAR	17.50	17.60	0.57%
NASCON	13.25	13.25	0.00%

Source: NGX