Stocks turn up after opening lower   as bonds market yields threaten the rally

Nov 13 (Lagos) - Stocks are turning higher after opening lower this morning with early gains in OANDO , GTCO , FBNH & UBA at the time of writing this article. 

There were some disappointing results from the forex market to close the last week. Also the fixed income market showed weaknesses as yields jumped higher as investors worried that the high yields could have a negative impact on the stock market as we are talking about north of 17% in the bonds market which is holding its latest Primary market auction today.

Last week the Treasury Bills Primary market auction gave investors almost 17% in that market so investors will be looking for north of 17% in the bonds market. That is a bad sign for the stock market which is looking like its extended at this point and needs to cool.

Bonds market is a much bigger market than the stock market. What the big boys do there always impacts the stock market investors. The problem with these interest rates is that although they seem high, they are sharply lower than the inflation problem in the economy.

The CBN has allowed inflation to snowball into a monster over the past 8 years and now we have reached an inflection point where we should not be surprised to see interest rates north of 20% in the short term to tame that inflation monster. That will impact stock market whether we like it or not. It will suck up most of investors funds because that will just be too good to let go because its risk free return and the traders in that market are playing in tens of billions if not hundred of billions. There are some investors who don't even enter the stock market when the yields are that high in the bonds market. 

Stock market has had a great rally this year and some stocks like TRANSCORP , TRANSCORPHOT , MRS , CONOIL , SEPLAT , CWG & DANGSUGAR and some other lesser known micro-caps have turned into gold for early investors. We should tame our expectations for the next few months especially if we get a Santa rally. 

reporting for on Monday, Nov 13 2023 from Lagos, Nigeria
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