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EM Volatility Declines, Forward Yields Hold at 7% — ZE Outlook Confirmed

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By Chinedu Okoye  Recent Developments and Zero Equilibrium Outlook: The recent decline in emerging market (EM) volatility and the stability of forward market implied yields at an average of 7% have reinforced Zero Equilibrium’s bullish stance on EM sovereign bonds. Back in our Global Macroeconomic and Financial Markets Outlook (Per Asset Class) 2025 published on December 24, 2024, we highlighted that: “EM bonds carry the potential for offering the best risk-reward balance.”¹ – Zero Equilibrium (Dec. 24, 2024) (Excerpt from ZE Global Financial Markets Outlook for 2025)¹ Despite recognizing ongoing exchange rate risks, we argued that the risk-reward balance potential in EM sovereigns remained compelling going into 2025. Bloomberg Confirmation: Bloomberg reporting today highlights this trend: “High-yielding EM currencies remain appealing, with three-month forward implied yields in Mexico, Brazil, and Colombia at 7% or higher. With FX volatility easing, investor...
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Zero Equilibrium Revised 12 Month Naira Outlook:

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By Chinedu Okoye  Spot Rates Strengthens Beyond ZE Expectations: Spot USD/NGN is currently N1,490.33, reflecting continued relative strength of the Naira against the USD and other majors.  At the time of our last  ZE Naira outlook : The Naira was selling for N1560/$1. And at the N1500/$1 - N1600/$1 range, was as “relatively strong”. This just inside the strong case zone in the earlier ZE Outlook where it was state that; below N1500 - N1400/$1 as a strong case scenario; N1500-N1600/$1 as the baseline level, and; above N1700+/$ as the most bearish scenario. Given the economic developments on the global economy (a range of monetary policy decisions and forward guidance, changes in the Oil market, and CBN monetary policy) since our last Naira outlook earlier in the year, for FY 2025. Going NGN/USD 12 Month Forward Rates: Data from @Investingcom showed Forward points from Investing.com translate into 1-year forwards at N1,703 (bid) and N1,783 (ask), implying a +...
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Zero Equilibrium CBN Monetary Policy Watch: A Review of the MPC's Decisions

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– By Chinedu Okoye  Foreword:  The monetary policy committee at the Central Bank of Nigeria held its 302nd meeting Tuesday 22 September, with adjustments made to it's regulatory and reserve requirements that balances interests of different groups, satisfying calls for a cut, without betraying it's tight monetary policy stance. The Nigerian Central Bank's MPC decision siggests a balancing of interests, but ultimately focuses more on restrictive policy. The MPC cut rates by 50bps cut, as opposed to ZE expectations of a 25bps cut –per our previous post:  ZE Monetary Policy Watch: A Review and Outlook on September Global Central Bank Rate Decisions  . But also in line with market experts expected 25bps - 50 bps cut. A Dual Move with Muted Multiplier Effects: This is viewed (by ZE) as a systematic dual move, that satisfying political and industry pressures on the surface, and restrciting money supply via the non-TSA CRR channel. However, the cut in monetary po...
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ZE Monetary Policy Watch: A Review and Outlook on September Global Central Bank Rate Decisions

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By Chinedu Okoye  1.0 Review of Monetary Policy Decisions so far in the Month: The notable central bank rate decisions in September across the world and relevant to Zero Equilibrium were; The European Central Bank (ECB); US Federal Reserve (Fed); Bank of Canada (BoC); Bank Of Ghana (BoG); Bank of England (BoE).  2. The Reserve Bank of Australia, Central Bank of Nigeria; Swiss National Bank schedules for September 30, 22nd, and 25th respectively. 3. The decisions of the Central Banks in the first Paragraph is briefly outlined, explained and analysed, in this section (1.0). The next section (2.0), comprises of the outlook for the latter (yet to be announced category would follow). 1.10 Central Bank Rate Decisions: The Bank of Canada and the Federal Reserve cut benchmark rates by 25bps each, with both parties siting labor market and broader economic concerns. Ontheotherhand, the European Central Bank held rates steady, singlalling an end to it's cutting cycle. Also ...
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Revolutionizing AI for Beter Learning Outcomes: Zero Equilibrium View on an African (Nigerian) Strategy

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By Chinedu Okoye  Summary: - The education system is undergoing a gradual change, and more rapidly in China, as AOnmodels are being integrated into the learning process. - This has led Derek Li, of Squirrel, to bet everything including his children's schooling on AI. Adaptive artificial intelligence systems are being used to enhance human productivity and learning. - Short-term stetides made are encouraging and I've an indication of what the future may hold with regards artificial intelligence.  - Wider acceptance is expected overtime, and developing countries especially in Africa have a lot to do to catch up with modern realities and sogofocant advancement in peeking processes. - Counties like Nigeria which fall into that category must move as quickly as possible to [gradually] close the gap. The Education Evolution: “... in Shanghai, dozens of Chinese students hunch over tablet screens, engrossed in English, math and physics lessons. Algorithms track every keystr...
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Sterling, Stability, and Strategy: A Rebuttal to Britain’s Fiscal Austerity CallsIn Nigel Green's article, “Britain’s Fiscal Reality Demands a Hard Budget”,

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- By Chinedu Okoye  Nigel Green (founder and CEO of deVere Group) argues that the UK should prioritize raising revenues and commit to a multi-year plan to stabilize debt as a share of GDP. His concern is that with a deteriorating public balance sheet and inflation running nearly twice the Bank of England’s target, the UK’s fiscal credibility is under question. On the surface, this is a sensible position, however a disagreement ensues, as I am of the opinion that —though moderation is key· –Britain does not need a harder budget or deeper revenue chasing. The opposite, however is the case: Britain should lean more on debt issuance — within calculated limits — to stabilize its economy, manage expectations, and exploit its unique position as a reserve currency issuer. Gilts, Sterling, and Market Sentiment: This week’s moves speak volumes about investor sentiment and/or confidence, as UK long-term gilt yields climbed to three-year highs while sterling weakened against the U....
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Tether Bets on Gold Miners: A New Layer of Protection

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By Chinedu Okoye  . Summary: • The Financial Times reports that Tether, the company that issues USDT, is looking to invest in Gold Miners, terming them ‘Natural Bitcoin’, financial times reports. • Coming off a $5.7bn profit in the first half of the year, the move signals a deeper shift into how institutions are hedging against inflation and exchange rate risks. • Tether currently maintains a 1:1 peg against the dollar, through a range of USD denominated assets. A move to increase it's gold exposure could involve a reduction in its Treasuries holdings. • This is a bullish signal for Gold and a justifiable strategy that provides , protection, price appreciation and relative liquidity, cause in an bullish [Gold] market you can get more value from offloading gold assets, than you would from offloading Treasuries. Tether's Reserve Mix:  Their Portfolio compromises of; 1. Short-term Treasuries which makes up 75.86% of  the company's reserves, dominates the mix. ...
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