Global Economy

• According to Labor Department Statistics, US Wholesale Prices Jumped To 9.7% Y-O-Y In January slightly higher than the historic levels suggesting that the U.S. economy’s struggle with inflation may persist for a while. US producer price index (PPI) data, rose by 1% in January M-o-M, double the expected 0.5% forecasters were expecting and more than two times higher than the 0.4% seen in the prior month. Excluding food, energy, and trade services, which make up the core PPI, there was an increase of 0.9% for the month, ahead of the 0.4% estimate and 6.9% higher on a year-by-year basis.
• According to the US Labor Department, the number of Americans filing new claims for jobless benefits unexpectedly rose to 248,000 last week, an increase of 23,000 and the first spike in a month.  After seeing an increase in January, unemployment benefits began falling this month. Economists polled by Reuters had forecasted 219,000 applications for the latest week, but the uptick still remains below pre-pandemic levels as labor market conditions continue to tighten. The construction sector was among the industries taking a major hit as the Commerce Department also reported on Thursday that homebuilding dropped by more than 4 % last month due to freezing temperatures.
• The International Monetary Fund (IMF) says Malaysia’s economy is set for a gradual recovery from the Covid-19 downturn, with 2021 real gross domestic product (GDP) growth estimated at 3.1 % and it is expected to further accelerate to 5.75 % in 2022. According to the preliminary findings of an IMF team led by its economist Lamin Leigh, growth will be supported by the authorities’ impressive vaccine rollout and swift implementation of economic policy support measures, pent-up domestic demand and continued strong external demand.  
• The ECB expects all of its bond buying programme to stop shortly before it starts raising the key ECB interest rates. According to a prominent member of the European Central Bank’s Governing Council has said the ECB’s net asset purchases could end in the third quarter of this year, but tweaks to the bank’s monetary policy could mean that rate hikes might not immediately follow. The French central bank, noted on Tuesday that soaring inflation and geopolitical risks mean that the central bank should bring a level of “optionality” into its thinking when it meets again on March 10. Earlier this month, inflation in the EU hit a record 5.1% in January.
• U.K. inflation came in at an 5.5% Y-o-Y in January, slightly ahead of forecasts (5.4%) and remaining at a 30-year high. On a monthly basis, consumer prices contracted by 0.1%, slightly less than expected by economists in a Reuters poll. The Y-o-Y price growth of 5.5% is the UK’s highest since 1992, and the Bank of England has imposed consecutive interest rate hikes for the first time since 2004 in a bid to contain runaway inflation. Households in the U.K. are feeling the pinch from a cost-of-living crisis as energy prices surge.

Nigeria Economy

• According to the fourth-quarter GDP report released by the NBS on Thursday, Nigeria recorded a real GDP growth rate of 3.98 % in the fourth quarter of 2021 having grown at a magnitude of 0.51%, 5.01% and 4.03 % in the first three quarters respectively, the fourth quarter figures implies that the FY2021 real GDP growth rate came in at 3.4%.  The Q4 GDP report shows that the non-Oil sectors contributed 93% of the country’s GDP while the Oil sector contributed 7% of the GDP. The 3.4% full year real GDP growth is the highest since 2014 when the country grew by 6.3%
• Data from NBS also shows that consumer price index, which measures inflation increased by 15.60% year-on-year in January 2022, this is according to the latest NBS CPI report released on Tuesday. January’s inflation figure is 3 basis point lower than the December Inflation figure (15.63%). The figure shows that the headline inflation rate slowed down in January when compared to the same month in the previous year.  On a month-on-month basis, the Headline index increased to 1.47 % in January 2022, this is 34 basis points lower than 1.82 % recorded in December 2021. The drop in inflation has been associated with the last harvest season and the relatively lower demand compared to the festive period.
• Electricity consumers on Thursday kicked against the silent increase in the tariff payable by customers to power distribution companies for electricity consumed. According to them the Nigerian Electricity Regulatory Commission had adjusted the tariffs payable to Discos by a N4 adjustment. Port Harcourt and Abuja (Discos) are said to have effected the increase.  Speaking to journalists, the NCPN president insisted that the regulator should publish the NERC approved schedule of the proposed ‘bit-by-bit’ increment.
• Renaissance Capital has projected an increase in Nigeria’s budget deficit in relation to Gross Domestic Product (GDP) from 3.4 % to 4.7 % on the back of the recent announcement of the retention of a N2.55 trillion supplementation for fuel subsidy this year. The budget as proposed had a N6.25 trillion deficit, making approximately 3.39 % of GDP. The delay in removing the subsidy implies a budget deficit of 4.7 % of GDP in FY2022. The bank upwardly reviewed Nigeria’s2022 growth forecast to 2.9 %, from 2.8 % with oil prices which previously sold for $60 per barrel rising to $80 per barrel.
• The European Union has announced an EU-Nigeria Digital Economy Package worth €820 million until 2024. The European Commission Executive Vice-President, Margrethe Vestager, announced the package on Sunday night at the Presidential Villa during a meeting with Vice President Yemi Osinbajo. Also at the event, it was made known that Nigeria and EU are looking to explore Raising LNG Supply to European Countries’, on Monday. Speaking at the meeting, Vestager said the €820 million was included in the Global Gateway Africa-Europe Investment Package worth €150 billion earlier announced by the EU Commission’s 

Review and Outlook

Last week, the major developments were the release of real GDP growth figures for Q4 2021 and the CPI inflation data for the month of January 2022. It is expected that the MPC would take the two crucial data into consideration at its next meeting. But as both indicators suggest modest progress, the likelihood is that the MPC would retain rates till Half year 2022 when most advance economies would have raised rates. Meanwhile, the global economy has been caught between the crosswinds of Russian-Ukrainian tensions. Global Inflation concerns in the past week also portends an increasingly hawkish central banks’ stance. Ahead of next week, German GDP and Foreign Trade Statistics are  billed for release 

Energy Report

Domestic

• The Nigerian National Petroleum Corporation Limited (NNPC) in a circular has stated that it is distributing one billion litres of safe petrol to accelerate the distribution of PMS (petrol) and curtail the shortages across the country. The corporation also noted that 2.3 billion litres of petrol would arrive in Nigeria before February ending to address the current scarcities and restore sufficiency.
• The NNPC on Wednesday noted that five Nigeria-bound petrol-laden vessels from Belgium were turned back to avoid a repeat of the imported adulterated fuel.
• The Minister of State for Petroleum Resources, Timipre Sylva, has said the decision of the federal government to extend the removal of petrol subsidy by 18 months was to enable the government to set up the requisite structures to mitigate the negative impact of the subsidy removal on Nigerians.
• With NNPC yet to fully recall the adulterated petrol and the difficulty in getting to refill tanks at petrol stations, some marketers have resolved to blend the imported adulterated petrol with fresh/cleaner fuel.
• The fuel scarcity that started a few weeks ago in Lagos, Abuja and other cities persist as at the close of business on Friday as Nigerians continue to queue for hours at petrol stations to refuel.

Foreign

• Oil prices on Monday hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world’s top producer in an already tight market.
• Oil production in Libya may face another disruption as the east-based Parliament named a new prime minister, while the incumbent refused to step down and was reportedly a target of an assassination attempt, another political rift in the OPEC oil producer.
• The US White House and a few democrat lawmakers are considering a move to temporarily halt federal taxes on gasoline to offset the rising fuel pump prices.
• The European Commission President, Ursula von der Leyen, has said the European Union would be able to cope with crisis-induced disruption to gas supply from Russia as the commission has spoken with the US, Qatar, Egypt, Azerbaijan, Nigeria, and South Korea on the possibility of increase gas deliveries through extra shipments or contract swaps.
• The International Energy Agency (IEA) through its Executive Director, Fatih Birol, has called on the OPEC+ group to bridge the wide gap between its production quotas and the lower actual supply to the market.
• Anton Siluanoy, the Finance Minister of Russia on Wednesday said the country is ready to re-route its oil and gas supply to its allies. He said Russia’s foreign exchange reserves, National Wealth Fund and surplus budget should shield its economy from any possible sanctions.
• Oil prices extended losses on Friday and were headed for a weekly fall, as the prospect of extra supply from Iran returning to the market outweighed fears of a possible supply disruption arising from a Russian invasion of Ukraine.
• Brent had a weekly decline of -0.11% (see Table 1).

Metals

Gold inched upwards by +3.20% while Silver also depreciated by +2.95% W-o-W (see Table 1).

Agriculture

• Cocoa prices dropped by -6.46% W-o-W.
• Corn prices grew by +1.16% W-o-W while Sugar dipped by -1.01% (see Table 1).

Table 1: Weekly Change in Commodity Prices

Commodity	18-Feb-22	11-Feb-22	31-Dec-21	Weekly Chg	YTD Chg
Brent	93.04	93.14	78.54	-0.11%	18.46%
Gold	1894.8	1836	1827.1	3.20%	3.71%
Silver	23.93	23.245	23.27	2.95%	2.84%
Cocoa	2636	2818	2546	-6.46%	3.53%
Corn	653.75	646.25	595.5	1.16%	9.78%
Sugar	17.59	17.77	18.83	-1.01%	-6.59%
Source: CNBC

*Data for 18^th February 2022 is as of 5:41pm (Nigerian Time)

Outlook

• In the coming week, oil prices are expected to stabilize as the world looks on at tensions between Russia and Ukraine while awaiting the arrival of Iranian oil.
• Gold price is expected to climb in the coming week as demand for the precious metal increases
• Cocoa prices are expected to stabilize in the coming week as 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 on it’s 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

This week, the Naira depreciated for most trading sessions at the I & E FX Window.

On Thursday, the Naira traded at the N416.67/USD, which closed flat on a week-on-week (W-on-W) basis, at the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it also depreciated by -0.06%.

Average Benchmark Yields
	10-Feb-21	17-Feb-21	% Change
I & E FX Window	416.67	416.67	0.00
NAFEX ($/N)	416.37	416.62	-0.06%

Source: FMDQ

Money Market

In the absence of any significant outflows this week, system liquidity remained elevated pushing money markets rates lower.

At the close of the trading on Thursday, open repo (OPR) and overnight rates (O/N) settled at 0.75% and 1.00% respectively indicating a W-o-W fall of -35.90% and -33.33%.

Money Market Rate
	10-Feb-21	17-Feb-21	% Change
OPR (%)	1.17	0.75	-35.90%
O/N (%)	1.50	1.00	-33.33%

Source: FMDQ

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

Treasury Bills Market

The bulls dominated the Nigerian Treasury Bills market this week as investor sentiments were positive towards the securities.

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 -5.42%, yields on OMO bills also fell by -6.53%.

Average Benchmark Yields
	10-Feb-21	17-Feb-21	% Change
T. Bills (%)	4.43	4.19	-5.42%
OMO Bills (%)	5.67	5.30	-6.53%

Source:FMDQ

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

FGN Bond Market

The local bond market was bullish, with seen interest seen across all maturities.

At the close of trading on Thursday, the market closed mixed. Overall average benchmark yields closed at 11.28%, benchmark yield dipped by -2.00%.

Average Benchmark Yields
	10-Feb-21	17-Feb-21	% Change
Short Tenor	7.54	7.96	+5.57%
Mid Tenor	10.91	10.98	+0.64%
Long Tenor	12.48	12.34	-1.12%

Source: FMDQ

At this weeks’ bond auction, the DMO offered N150.00 billion worth of FGN JAN 2026 and FGN JAN 2042, with stop rates of 10.95% and 13.00%, respectively. The subscription stood at N557.72 billion, while N297.39 was allotted.

FGN Eurobond Market

The bearish bias in the Eurobond market reduced slightly this week, as the Russian-Ukraine tension cooled slightly. The average benchmark yield advanced by 2bps to 6.85%.

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 -0.13%. The Nigerian Exchange lose N29.46bn. However, year-to-date return was positive at +10.36%, while the market capitalization settled at N25.41trillion.
• Sectoral performance across sectors tracked was mixed, at the close of trading on Friday, NGX-Consumer Goods was the highest gainer for the week with +2.35% while NGX- Oil and Gas recorded the highest decline with -3.45%. NGX-Insurance NGX-MERIVAL closed the week with +1.05%, +0.73%, respectively.
• Market breadth for the week closed positive with 26 gainers led by LEARNAFRCA  as against 15 losers led by PHARMDEKO and FTNCOCOA

NASD OTC  

The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a negative movement in Market capitalization and NSI.  The NSI and Market capitalization closed the week 734.62points and N622.06bn with decline of -2.  24%  and -2.24% respectively.

Dangote and Elumelu Index   

Dangote Index closed the week negative with 143.49 basis points from 143.76 basis points recorded the previous week, representing a decline of -0.21%.

DANGSUGAR   recorded a decline of -0.47%. Respectively NASCON DANGCEM recorded +3.98% +9.43%. 

Table 2: Dangote Index W-o-W Change

Company	11-Feb-22	18-Feb-22	WoW Chg
DANGCEM	274.80	273.50	-0.47%
DANGSUGAR	17.60	18.30	3.98%
NASCON	13.25	14.50	9.43%

Source: NGX

Furthermore, theElumelu Index closed positive with 119.39 basis points from 117.70 basis points recorded the previous week, a W-o-W rise of +0.36%

 TRANSCORP, UBCAP and AFRIPRUD   closed   the   week   positive   with   +0.86%,   +9.09%, +3.03% respectively while UBA, closed the week negative -1.72%. TRANSCOHOT closed flat W-o-W.

Table 3: Elumelu Index W-o-W Change

Company	11-Feb-22	18-Feb-22	WoW Chg
AFRIPRUD	6.60	6.80	3.03%
TRANSCOHOT	5.38	5.38	0.00%
TRANSCORP	1.16	1.17	0.86%
UBA	8.70	8.55	-1.72%
UBCAP	11.00	12.00	9.09%

Source: NGX