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Monthly News Letter -September 2015

1st October

MONTHLY NEWSLETTER

 

LOCAL MARKET

 

August 2015

 

September 2015

   

 

USD/KES EXC RATE

 

103.87

 

105.29

GBP/KES EXC RATE

 

160.31

 

159.58

INFLATION

 

5.8%

 

6.0%

91 DAY T/BILL

11.5%

20.6%

182 DAY T/BILL

12.4%

20.3%

NSE 20 SHARE INDEX

 

4080

 

4153

NSE ALL SHARE INDEX

 

138

 

145.65

91 DAY CMS RATE - KES. 1M

 

15%

 

21%

182 DAY CMS RATE - KES. 1M

 

14%

 

18%

 

 

Overall 12 month inflation increased from 5.8% in August 2015 to 6.0% in September 2015. Non food & non fuel inflation rate rose from 4.5% in August 2015 to 4.7% in September 2015.

The money market was relatively liquid during the week ending September 30, 2015 supported by redemption of government securities, OMO maturities and government payments. These inflows were partially offset by withdrawals through mop -up operations by the CBK through Term Auction Deposits (TAD), issuance of securities in the primary market and tax remittances by commercial banks.

The bond market turnover increased by 160.8%, with the number of deals increasing from 56 to close at 71 during the first week of October 2015. This significant rise in bond trading may be attributed to the new bond issue FXD1/2015/1 and traders shifting from the secondary market to primary Bond market

INTERNATIONAL MARKETS

US Economy

U.S. employers slammed the brakes on hiring over the last two months, raising new doubts the economy is strong enough for the Federal Reserve to raise interest rates by the end of this year.

Payrolls outside of farming rose by 142,000 last month and August figures were revised sharply lower to show only 136,000 jobs added that month, the Labor Department said on Friday.

Some of the strongest headwinds on the U.S. economy come from the commodity sector, which has slowed in part because of weaker demand from China.

The price of oil has fallen nearly 50 percent over the last year, and U.S. mining payrolls, which include energy sector jobs, fell by 10,000 in September, the ninth straight month of declines.

Euro zone

Global equities ended their worst quarter since the 2011 euro zone crisis on an upbeat note with a rally on Wednesday on hopes that Wall Street had bottomed and the commodities rout was over, while the dollar also rose.

Major equity indexes around the world declined 10 percent or more from July through September as fears mounted of a global slowdown brought on by China. Slower Chinese growth also slammed commodity prices and countries that depend on their export.

Euro zone prices fell by 0.1 percent on an annual basis in September after rising 0.1 percent last month, feeding speculation the European Central Bank will expand or extend its bond buying as the Fed prepares to raise rates.

Emerging market

World economic growth lost momentum in September, with China's factory output shrinking again, euro zone manufacturing growth slowing, and U.S. activity steady.

The latest business surveys across Asia, Europe and the Americas paint a gloomier picture and are likely to prompt more calls for central banks to loosen monetary policy even further.

Surveys of China's factory and services sectors showed the world's second largest economy may be cooling more rapidly than earlier thought, with deeper job cuts.

Taken together with a stock market crash in Shanghai during the summer and a surprise devaluation of the Chinese yuan, the data highlight just how difficult it will be for policymakers to steer China's economy out of the biggest slowdown in decades.

China is a major importer of raw materials, especially from commodity producers such as Australia, Brazil and Canada, so a slowdown in demand is being felt globally.

Concerns over China and global market volatility figured high on a list of reasons the U.S. Federal Reserve did not raise interest rates last month.

 

 
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