In March 2024, Nigeria's inflation rate rose to 33.20% from 31.70% in February. This increase continues the trend of growing inflationary pressures observed since 1996, which has averaged 13.44% with extremes reaching as high as 47.56% in January 1996.
Key Highlights:
Food Prices: There was a significant jump in food prices, increasing by 40.01% compared to last year, representing the highest on record. Historically, food inflation has averaged 13.26%.
Urban vs. Rural Inflation: Urban areas saw a year-on-year inflation rate of 35.18%, while rural areas experienced a slightly lower rate of 31.45%.
This data highlights the acute challenges of food affordability and the broader economic stressors impacting different sectors and regions within the country.
The US dollar index rose by 0.7%, reaching a six-month high due to increased safe-haven demand amidst heightened geopolitical risks between Iran and Israel. EUR/USD dropped to a six-month low of 1.0623.
USD/JPY saw fluctuations, hitting a new 34-year high of 153.30 before moving back to 152.59, and then climbing to 159.32.
Geopolitical tensions escalated as Iran launched over 300 armed drones and missiles against Israel, marking a new phase of volatility in the Middle East.
Oil and gold prices saw slight increases; West Texas futures rose to $85.68 (+0.3%) and COMEX gold to $2351.50 (+0.35%).
FOMC members expressed a cautious stance on U.S. monetary policy:
Collins emphasized no urgency for rate cuts due to persistent inflation and a strong labor market.
Schmid advocated for patience, preferring evidence of sustained inflation reduction before policy adjustments.
Daly saw no immediate need to adjust rates, stating policy is well-positioned currently.
Bostic projected a single rate cut for 2024, expecting continued economic growth and a gradual decrease in inflation.
UK economic indicators for February showed mixed results:
GDP slightly increased by 0.1% m/m.
Industrial production outperformed expectations with a 1.1% rise.
Manufacturing also exceeded forecasts, up by 1.2%.
Service sector growth was modest at 0.1%.
Construction output declined more than expected, down 1.9%.
Interest Rates:
The US 2-year Treasury yield decreased from 4.92% to 4.86%, settling at 4.90%, while the 10-year yield dropped from 4.56% to 4.48%, currently at 4.52%.
Market expectations remain for the Federal funds rate, set at 5.375% (mid), to hold steady at the next meeting on May 2nd, with a 60% probability of a rate cut in July.
In credit markets, the CDX IG index widened by 1.9 bps to 54.78 bps. Boeing and Expedia were among the best performers, whereas Ally Financial and DXC Technologies negatively impacted the index.
Cash bonds saw a tightening of 2.3 bps to 120.5. Utilities and industrials were the top-performing sectors, while subordinated financials and communications lagged behind.
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Disclaimer: The information contained in this report is intended for informational purposes only and should not be considered as investment advice. The information is obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.
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