Global Economy

USA: The number of Americans filing new applications for unemployment benefits saw a slight increase last week, rising by 6,000 to a seasonally adjusted 225,000 for the week ending September 28. This uptick comes amid the disruptions caused by Hurricane Helene in the U.S. Southeast and ongoing strikes at Boeing and ports, which could skew the labor market data in the near term. According to the Labor Department’s report, the labor market is stabilizing as the third quarter concludes, potentially allowing the Federal Reserve to avoid making large interest rate cuts. Additionally, another report indicated that activity in the services sector reached its highest level in over 18 months in September, fueled by strong growth in new orders. Economists had anticipated 220,000 claims for the latest week, highlighting the ongoing complexities in the labor market landscape.

 

 

Sub-Saharan African Economies

 

U.K: Britain’s economy grew at a slower pace than previously estimated in the second quarter, with economic output expanding by 0.5% in the April-to-June period, according to the Office for National Statistics. This figure is slightly below the preliminary estimate of 0.6% growth in gross domestic product, which economists polled by Reuters had expected to be confirmed. However, there are positive signs for finance minister Rachel Reeves as she prepares for next month’s budget. Notably, the household saving ratio increased to 10.0%, up from 8.9% in the first quarter of 2024, suggesting improved household finances and encouraging business investment.

Egypt: Egypt’s annual urban inflation rate rose to 26.4% in September 2024, up slightly from 26.2% in August, exceeding market forecasts of 25.9%. This is the highest inflation since June and remains well above the central bank’s target of 5-9%, pushing back expectations of the first interest rate cut since 2020. The increase was partly fueled by sharp hikes in fuel prices (10-15%) in late July, followed by a significant rise in metro ticket prices (25-33%) at the start of August, and an electricity tariff spike (21-31%) over August and September.

Kenya: The Central Bank of Kenya lowered its benchmark interest rate by 0.75% to 12% on October 8th, 2024, marking the second straight rate cut, something that hasn’t happened since the Covid-19 crisis. This move was driven by inflation dropping to the lower end of the central bank’s target range of 2.5% to 7.5%, and a stronger Kenyan shilling, with the aim of increasing lending to the private sector. Kenya’s annual inflation rate fell to 3.6% in September 2024, its lowest level since December 2012, down from 4.4% in August.

Uganda: The Bank of Uganda lowered its benchmark interest rate by 0.25% to 9.75% on October 7th, 2024, marking the second straight rate cut. Uganda’s annual inflation rate fell for the second month to 3% in September 2024, the lowest in eight months, down from 3.5% in August, remaining below the central bank’s 5% target.

Domestic Economy

Major updates during the week:

  • Nigeria’s capital importation increased 152.81% y/y to USD2.60bn in Q2:2024 but declined 22.85% q/q due to capital flight amid a marginal Naira appreciation.
  • The CBN signed an MoU with foreign regulators to enhance oversight of Nigerian banks with overseas subsidiaries, aiming to strengthen regulatory collaboration and boost confidence in the banking sector.
  • NNPCL finalized a USD3.30bn gas sales-and-purchase agreement with Shell, Total Energies, and Agip for a methanol plant, marking a major step toward monetizing Nigeria’s vast gas reserves.

Nigerian equity market: Stocks closes marginally up following mixed week

The Nigerian equities market closed marginally up this week, with the NGXASI up 0.09% WoW to 97,606.63pts. Year-to-date performance stands at 30.50%. Sector performance was mixed, with Oil and Gas, Insurance sectors gaining, while Industrial Goods, Consumer Goods, and Banking sectors declined. MECURE, UPL, LASACO, FIDELITYBK, and PZ were the top gainers, while TRIPPLEG, DAARCOMM, AFRIPRUD, REGALINS, and TANTALIZER were the top losers.

Nigerian fixed-income market: Tight liquidity drives bearish sentiment

This week, the DMO reaffirmed its commitment to reducing borrowing costs by issuing N81.9 billion, despite receiving bids totaling N273.3 billion at an average stop rate of 18.12%, slightly lower than the previous 18.17%. However, this reduction in stop rates was not reflected in the secondary market, largely due to tight system liquidity and the CBN’s continued efforts to raise yields in the financial market. As a result, the average treasury bill yield in the secondary market rose by 48 basis points to 23.16%. Nonetheless, there was some buying interest at the long end of the curve, with yields on August 21, 2025 (-0.89%) and August 07, 2025 (-0.71%) maturities declining. In the bond market, a mild bearish sentiment prevailed, particularly on mid-tenor instruments. Meanwhile, the Eurobond market saw buying interest across the curve, with yields dropping by 19 basis points, driven by demand for short-tenor instruments. Looking ahead to the next trading week, we anticipate continued bearish sentiment, primarily due to ongoing system liquidity constraints.