Global Economy

U.S.A: The latest U.S. jobless claims report highlighted a resilient labor market, with initial claims rising slightly by 6,000 to 223,000 for the week ending January 18. This aligns with expectations of a stable labor environment, supported by ongoing low layoffs despite a gradual hiring slowdown. Factors such as California wildfires and severe winter weather contributed to the marginal increase, with unadjusted claims falling in most states, including significant drops in Michigan and Texas. Labor market strength has reinforced expectations that the Federal Reserve will maintain its current interest rates at its upcoming meeting, refraining from additional rate cuts for now.

Sub-Saharan African Economies

 

China: China maintained its benchmark lending rates for the third consecutive month at January’s monthly fixing, keeping the one-year Loan Prime Rate (LPR) at 3.1% and the five-year LPR at 3.6%, aligning with market expectations. This decision reflects Beijing’s cautious approach to monetary easing amid persistent depreciation pressures on the yuan and narrowing bank margins. While the five-year rate influences mortgage pricing, the one-year rate underpins most loans in China. Despite China’s economy achieving its 5% growth target in 2024, the urgency for further stimulus has diminished. Authorities are focusing on stabilizing the yuan through measures such as verbal interventions, adjustments to capital flows, and offshore yuan bill issuance. The Politburo’s recent statement about adopting an “appropriately loose” monetary policy in 2025 alongside proactive fiscal measures signals potential future shifts in China’s economic strategy while addressing structural growth challenges.

Kenya: Moody’s revised Kenya’s outlook to “positive” from “negative,” citing improved debt affordability, reduced liquidity risks, and support from low inflation and exchange rate stability. Moody’s affirmed Kenya’s long-term issuer ratings at “Caa1,” while S&P maintained a “B-” rating with a stable outlook.

Angola: Angola’s central bank held its key interest rate steady at 19.5% during its first 2025 meeting, marking the fourth consecutive pause as inflation continues to decline. Annual inflation slowed to a nine-month low of 27.50% in December 2024, down from 28.41% in November.

Morocco: Morocco’s inflation rate eased to 0.7% in December 2024 from 0.8% in November, driven by lower prices for food, beverages, and miscellaneous goods. Meanwhile, costs rose for recreation, culture, and hospitality, while transport deflation moderated. Monthly consumer prices declined by 0.2%, maintaining the prior month’s trend.

Domestic Economy

Major updates during the week:

  • FAAC disbursements to the three tiers of government in January fell by 17.5% m/m to ₦1.42 trillion due to a 6.6%-naira appreciation reducing foreign exchange gains, a 1.4% drop in domestic oil production, and declines in Oil and Gas Royalty, CET, Import and Excise Duties, PPT, and CIT revenues.
  • Nigeria’s total public debt rose to ₦142.32 trillion ($88.89 billion) in Q3 2024 from ₦134.30 trillion in Q2 2024, driven by increases in both external (₦68.89 trillion) and domestic debt (₦73.43 trillion). Debt servicing costs surged 25% y/y to ₦3.58 trillion, with yields expected to remain high in Q1 2025 as the government continues relying on debt financing to address budget shortfalls.

Nigerian equity market: NGX rebounds on bargain hunting and earnings boost

Nigeria’s equities market closed the week on a positive note, buoyed by bargain hunting in select stocks and bullish sentiment across indices. The All-Share Index rose by 1.22% to 103,598.3 points, recovering part of last week’s losses, while market capitalization gained ₦794.22 billion to close at ₦63.65 trillion. Gains in GUINNESS (+10%), TRANSCORP (+10.76%), TRANSPOWER (+7.96%), MTNN (+6.39%), GTCO (+5.60%), and CAP (+8.52%) offset declines in DANGSUGAR (-9.09%), CORNERST (-14.29%), and ARADEL (-2.88%). Despite this overall uptick, sectoral performance was mixed, with three of the five major indices ending in the red. The Banking sector led the gainers, advancing 4.09% week-on-week.

Nigerian fixed-income market: primary market auction supply pushes rate downward

Trading in the secondary market this week was heavily influenced by the primary market auction, where the Debt Management Office issued ₦756 billion despite total bids reaching ₦2.5 trillion. As a result, the rate on the 1-year maturity declined to 21.80%, down from 22.62% at the previous auction. This development led to a positive close in the secondary market, with yields dropping by 0.38% as demand increased for long-tenor instruments. In contrast, the bond market maintained a bearish trend, with the average yield rising to 20.72%. Meanwhile, after a volatile week, Nigeria’s Eurobond market ended relatively stable, with an average yield of 9.42%. Looking ahead, we anticipate increased buying interest in the market during the next trading week.