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Monthly Market Brief (October 2025)

MACROS

Disinflation and FX Stability Strengthen Market Confidence

Nigeria’s macroeconomic landscape underwent a decisive re-anchoring in October 2025, driven by sustained disinflation, improved FX stability, and major sovereign risk reductions. The removal of Nigeria from the FATF grey list marked a critical turning point, materially lowering compliance friction for cross-border transactions and restoring investor confidence in the country’s financial governance architecture. These structural improvements, underpinned by renewed access to Eurobond markets, strengthened external buffers and provided a more predictable macroeconomic environment for both domestic and offshore investors. 

Disinflation remained the centerpiece of market confidence, with headline inflation moderating for the sixth consecutive month to 18.02%, its lowest level since mid-2022. Food and core inflation continued to soften, reflecting reduced currency pass-through and more stable price formation. Through this period, the CBN maintained a tight monetary stance, holding the MPR at 27.00% and preserving a strong positive real interest rate. This combination of anchored FX markets and high real returns sustained robust foreign portfolio inflows and reinforced expectations that Nigeria is nearing the end of its monetary tightening cycle.

Inflation Trajectory
FX Driven by Reserve Accumulation and Cautious Policy Easing

The Nigerian currency market in October 2025 consolidated its stabilization trend, supported by improved foreign exchange liquidity, strengthened external reserves, and a cautiously moderated monetary stance from the Central Bank of Nigeria. Throughout the month, th Naira maintained a firm performance in the Nigerian Foreign Exchange Market, benefitting from sustained inflows and a more orderly price formation environment. The official exchange rate appreciated modestly, closing October at approximately ₦1,421 per U.S. Dollar, marking one of its strongest levels since the operationalization of the electronic FX trading framework. This reflected the combined effect of improved supply conditions and heightened investor confidence following Nigeria’s reinforced macro stability narrative.

Gross FX Reserves ($’ billions)

The availability of FX in the official market was bolstered by rising capital importation, particularly Foreign Portfolio Investment attracted to Nigeria’s positive real interest rate environment, and improved dollar inflows from the oil sector, which recorded a notable recovery during the year. These fiscal adjustments complemented monetary tightening to reinforce a more balanced foreign exchange liquidity profile. 

A critical anchor for the Naira’s stability during the month was the continued accumulation of external reserves. Gross external reserves strengthened from roughly $42.26 billion at the end of September to an estimated $43.15 billion at the close of October, reflecting almost $900 million in net reserve accretion. This improvement enhanced the central bank’s capacity to meet legitimate FX demand and significantly reduced speculative pressures in both the official and parallel markets. The strengthened reserve position also supported the broader policy narrative that Nigeria’s external balances were becoming more resilient, a development that reinforced confidence across the investment community. 

Although the Central Bank did not convene a Monetary Policy Committee meeting in October, market conditions continued to adjust to the earlier reduction in the Monetary Policy Rate to 27.00%. The September rate cut, the first in five years, signalled a cautious shift toward policy easing, made possible by sustained disinflation and greater FX stability. Even with the reduction, the 27.00% MPR remained sufficiently high to maintain Nigeria’s competitive carry advantage, encouraging further portfolio inflows. The Cash Reserve Ratio remained elevated, absorbing substantial liquidity from the banking system and helping to maintain disciplined monetary conditions consistent with the central bank’s broader stabilization objectives.

EQUITIES

Sustained Bull Momentum and Strategic Capital Rotation

The Nigerian bourse (NGX) closed October 2025 on a bullish note, extending its strong year-long performance and ranking among the world’s best-performing equity markets. The month was driven by
significant institutional capital rotation and renewed investor appetite for blue-chip stocks, whichmpushed the NGX All-Share Index (ASI) beyond the 150,000-point psychological threshold. The ASI rose by about 8.00% month-on-month (MoM) to close at 154,126.46 points, compared to a modest 1.72% gain in September. Consequently, market capitalization increased by ₦7.25 trillion, from ₦90.58 trillion in September to ₦97.83 trillion in October, reflecting substantial wealth creation within the period.  This strong monthly advance accelerated the Year-to-Date (YTD) return to approximately 51.22%, up from about 41.80% in September, cementing the market’s leadership position globally. 

This strong performance positioned October as the second-best month of 2025, behind the notable 16.57% rally recorded in July. The sustained rally highlights investors’ confidence in the resilience and value of Nigerian corporates despite high interest rates and declining fixed-income yields that would ordinarily divert liquidity away from equities.

NGX ASI Monthly Returns

Sectoral performance in October 2025 was broadly bullish, reflecting a distinct flight to quality as investors rotated capital into sectors with stronger earnings visibility and defensive fundamentals. The Industrial Goods Index (+17.50%) led the market, buoyed by institutional accumulation in cement and manufacturing stocks such as Dangote Cement (+26.64%), WAPCO (+15.91%), and BUA Cement (+12.50%),
supported by positive Q3 earnings and improved sentiment following Dangote Cement’s expansion into the Ivory Coast. 

Similarly, the Oil & Gas Index (+15.45%) benefited from rising global oil prices and large institutional trades concentrated in premium tickers like Aradel Holdings (+41.30%), Eterna (+29.08%), and Seplat (+10.00%), positioning the sector as a hedge against inflation and currency weakness. This suggests large-scale, sustained accumulation by major domestic institutional investors, such as pension funds, alongside possibly increased interest from sophisticated international investors seeking exposure to high-quality, fundamentally sound equity assets amidst global risk environments. This capital inflow demonstrates confidence that corporate earnings will continue to outpace macroeconomic volatility.

NGX ASI Historical Performance

The Consumer Goods Index (+4.85%) also advanced, driven by solid Q3 earnings expectations and pricing resilience from major firms including PZ (+21.74%), NASCON (+18.65%), and Vitafoam (+17.79%), while the Insurance Index (+3.37%) gained on the back of renewed interest in NEM (+19.64%) and
Mansard (+7.71%). 

In contrast, the Banking Index (-3.15%) was the only major laggard, reflecting profit-taking and capital reallocation rather than a fundamental sectoral decline. Following less impressive Q3 earnings, institutional investors strategically reduced exposure to Tier-1 banks such as Zenith Bank (-8.70%), GTCO (-4.69%), and Access Holdings (-4.68%) amid uncertainty surrounding regulatory capital recapitalization and liquidity demands. This selective sell-off underscores a deliberate shift in investor positioning, monetizing gains in liquid banking stocks to fund high-conviction moves into industrial and commodity-linked equities.

NGX Sectoral Returns in October
Sustained Bull Momentum and Strategic Capital Rotation

The list of the worst-performing stocks was dominated by small-to-mid cap equities that were acutely sensitive to weak corporate earnings, liquidity risk, and sector-specific challenges. The massive sectoral appreciation in Industrial Goods and Oil & Gas necessitates that the underlying bellwether stocks in these sectors deliver exceptional returns.

Outlook

In November, market activity is expected to be guided by an interplay of supportive corporate fundamentals and near-term risk triggers. On the upside, the release of 9M:2025 earnings across sectors is expected to drive further repricing of strong-performing stocks. A supportive macroeconomic environment, marked by easing inflation, stable interest rates, and rising oil prices, should help sustain valuations. Institutional investors are likely to maintain interest in fundamentally strong, high-quality stocks as a haven amid global uncertainty. 

Sectoral momentum remains skewed toward industrials, oil & gas and consumer goods, while banking may continue to underperform amid regulatory and capital pressures. Investors should monitor key triggers, upcoming earnings prints, inflation and rate surprises, FX/naira developments, and policy-tax changes, which could either reinforce the bullish trend or prompt liquidity tightening. 

However, the risk of profit-taking remains elevated: stocks that have delivered outsized gains may experience fund outflows, and uncertainties around the proposed Capital Gains Tax (CGT) could lead foreign and institutional investors to take pre-emptive positions out of the market.

FIXED INCOME

Disinflation and FX Stability Strengthen Market Confidence

October 2025 witnessed notable developments in the Nigerian fixed income market, shaped by dynamic liquidity conditions, active central bank interventions, and strong investor participation in both Treasury
Bills (NTBs) and Federal Government of Nigeria (FGN) Bond auctions. System liquidity experienced significant fluctuations, prompting continued monitoring and management by the Central Bank of Nigeria
(CBN) to maintain the restrictive monetary policy stance set by the 27.00% Monetary Policy Rate (MPR).

Investor appetite remained robust across primary auctions, particularly for longer-dated FGN Bonds, while secondary market activity reflected strategic positioning ahead of primary market events. Yield curve dynamics revealed an inversion in the nominal term structure, signaling market expectations of future monetary easing.

Domestic Money Market and System Liquidity

In October 2025, the Nigerian money market experienced significant liquidity fluctuations. Market liquidity started the month at ₦7.11 trillion on October 2, declined to ₦3.79 trillion by October 8, and later adjusted to ₦2.2 trillion on October 14 following Open Market Operation maturities. Despite these swings, the Central Bank of Nigeria (CBN) maintained a restrictive monetary stance, ensuring that the system
remained tightly controlled and that temporary liquidity surges did not spill over into unintended monetary easing or foreign exchange volatility. 

The CBN successfully anchored short-term interest rates throughout the month. The benchmark Open Buy Back (OBB) rate remained at 24.50%, while the Overnight (O/N) rate was tightly managed between 24.87% and 24.88%. These actions demonstrate the effectiveness of the CBN’s sterilization operations in absorbing excess liquidity and preserving the policy objectives set by the 27.00% Monetary Policy Rate.

Investor demand for Treasury Bills remained robust, highlighting strong confidence in risk-free government instruments. The October 8 NTB auction, offering ₦570 billion, was oversubscribed with ₦1.06 trillion in bids, while the October 22 auction saw ₦650 billion offered across three tenors and total bids of ₦750.91 billion. The 364-day bill cleared at a stop
rate of 16.14%, yielding 19.25%, above headline inflation but below the MPR, reflecting a deliberate strategy by the CBN to encourage banks to hold short-term government paper and limit speculative pressures in the broader market.

FGN Bond Market Review

The FGN Bond market drew significant attention, with the DMO offering ₦260 billion through the re-opening of the 5-year AUG 2030 and 7-year JUN 2032 bonds. Investor participation was exceptionally
strong, totaling ₦1.27 trillion, with demand heavily concentrated in the 7-year tenor, which was oversubscribed by more than eight times. This reflects market expectations for future capital appreciation and suggests that monetary tightening is approaching its peak. 

Marginal rates were set at 15.8320% for the 5-year bond and 15.8500% for the 7-year bond. Compared with the 364-day NTB yield of 19.25%, this represents a pronounced nominal yield curve inversion of roughly 340 basis points, signaling anticipation of future monetary easing. Investors increased duration exposure, favouring longer-term bonds over temporarily elevated short-term yields. 

Secondary market activity mirrored these dynamics. Treasury bills began the month with bullish sentiment, slightly compressing yields to 16.50%, while FGN bonds traded mixed as participants repositioned ahead of the auction. Post-auction, mid-to-long-term yields declined sharply, supported by residual unmet demand from the 7-year tenor. The yield curve inversion created strategic choices: short-term NTBs provided high carry, while mid-to-long-dated FGN bonds offered capital preservation and potential price appreciation as the CBN gradually normalizes the curve.

Eurobonds and Global Confidence

Nigeria’s U.S. dollar–denominated sovereign bonds delivered a strong performance in October, reinforcing the narrative of improving global investor confidence, both in Nigeria’s credit trajectory and in the broader African Eurobond space. 

Secondary market activity as of October 24, 2025, showed broad based tightening across the Nigerian Eurobond curve. The near-term 7.625% NOV 2025 bond traded at a yield of 4.337%, signaling very low perceived rollover or default risk, an outcome underpinned by improved liquidity conditions and effective debt management. 

Long-dated bonds also recorded notable price appreciation. The 10.375% DEC 2034 bond traded at 112.020, well above par, reflecting substantial repricing of Nigeria’s sovereign risk. Investors have adjusted their assessment of the country’s creditworthiness materially lower, driving yields down relative to issuance levels. These gains align with a year marked by improving fiscal indicators, better FX liquidity, and stronger policy credibility.

FIXED INCOME

OUTLOOK

October 2025 served as a validation point for Nigeria’s macroeconomic reform trajectory, cementing a high degree of confidence among both domestic and international investors. The stabilization of the Naira, the successful disinflationary path, and the enhanced sovereign credit profile (marked by the FATF removal and successful Eurobond issuance) all contribute to a highly constructive outlook for Nigerian fixed income assets.

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FEBRUARY INFLATION REPORT

Headline Inflation Eases to 15.06% in February but Monthly Pressures builds.

According to the National Bureau of Statistics, headline inflation in Nigeria eased marginally to 15.06% in February 2026 from 15.10% in January, marking an 11th consecutive month of disinflation. The moderation was driven by a decline in core inflation (15.88% from 17.72%), which offset the increase in food inflation (12.12% from 8.89%). On a month-on-month basis, headline inflation rose to 2.01% from -2.88%, indicating a short term rebound in price pressures

Disaggregated data shows that food inflation accelerated to 12.12% from 8.89% in January. Similarly, on a month–on– month basis, food inflation accelerated to (4.69% from a  6.02%) deflation recorded in January, the highest since rebasing, reflecting tightening food supply conditions as post-harvest gains fade and the farmers transition into the planting season. Additionally, persistent security and logistics constraints affect distribution to key consumption centers

Core inflation, which excludes volatile agricultural produce and energy, moderated to 15.88% vs 17.72% in January, but rose to (0.89% vs -1.69%), m-o-m, suggesting renewed underlying pressures. This uptick was driven by increases in the rent index (3.07% vs 0.72%) m-o-m, alongside a moderation in deflation within the transport (-0.26% vs -1.02%) m-o-m and restaurant components (1.12% vs -0.08%) m-o-m

OUTLOOK

Inflation is expected to edge higher in March 2026, potentially interrupting the recent disinflation trend. The disruption in the Strait of Hormuz amid tensions between the United States and Iran has elevated global oil prices, translating into higher domestic fuel costs (₦ 1250/per liter) and transportation expenses. In addition, the temporary depreciation of the naira is likely to increase imported inflation through exchange rate pass-through. Consequently, both food and core inflation are expected to rise modestly in the near term, with headline inflation likely to tick up slightly before stabilising, if energy and exchange rate pressures ease.

Y-o-Y Inflation Trend
M-O-M Inflation Trend
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BRB Monthly Market Report January 2026

MACROS

Nigeria’s macroeconomic landscape in January 2026 reflected a clear shift toward stabilization, supported by moderating inflation, improving foreign exchange dynamics, and growing international confidence in the reform trajectory of the economy. These developments provided a supportive backdrop for domestic financial markets and reinforced expectations of a more balanced macroeconomic environment in 2026.

Inflation dynamics improved during the period, with headline inflation moderating to 15.15% in December 2025 from 17.33% in November, according to the National Bureau of Statistics. This decline was largely
driven by the adoption of a revised Consumer Price Index methodology, which rebased the index to 2024 and transitioned to a 12-month average reference period. Under the previous 2009 methodology, inflation would have remained significantly higher, underscoring the technical component of the observed disinflation.

Nonetheless, underlying price pressures also eased, with food inflations lowing for the fifth consecutive month to 10.84%, supported by seasonal harvest effects and a firmer naira, while core inflation declined to 18.63% from 20.59%, reflecting reduced pass-through from exchange rate pressures.

Inflation Trajectory

In the foreign exchange market, stability at the Nigerian Foreign Exchange Market (NFEM) window improved noticeably in January. The naira strengthened toward the end of the month, closing within
the ₦1,386/$ to ₦1,401/$ range, as foreign portfolio inflows increased and liquidity conditions improved. Attractive domestic yields, coupled with enhanced confidence in policy direction, encouraged offshore participation in the fixed income market, easing demand pressures on the currency. This was further supported by improved supply from exporters and market participants, reinforcing near-term exchange rate resilience

Economic activity indicators also pointed to strengthening momentum. The Central Bank of Nigeria’s composite Purchasing Managers’ Index rose to 57.6 points in December 2025, marking the fastest pace of expansion in nearly five years and extending the expansionary trend to thirteen consecutive months.

 

 

Gross FX Reserves ($’ billions)

 

Growth was broad-based across sectors, with agriculture leading, followed by strong recoveries in industrial output and services activity. The PMI data suggest improving business confidence and strengthening domestic demand entering 2026.Nigeria’s international financial standing improved further during the month, following its formal removal from the European Union’s list of high-risk third countries for money laundering and terrorism financing, effective January 29, 2026. This development followed Nigeria’s earlier exit from the Financial Action Task Force grey list in October 2025 and represents a significant milestone in restoring global credibility. The delisting is expected to reduce transaction friction for cross-border flows, improve correspondent banking relationships, and broaden the base of international investors engaging with Nigerian assets.

The improving macro narrative was reinforced by the International Monetary Fund’s upward revision of Nigeria’s 2026 growth forecast to 4.4% in its January World Economic Outlook update. The revision reflects confidence in ongoing structural reforms, improved macroeconomic coordination, and stronger productivity across agriculture, manufacturing, and services. Nigeria is now positioned as a notable contributor to global growth in 2026, with an outlook that compares favorably to several peer economies.  

External buffers continued to strengthen, providing additional support to macro stability. Gross external reserves rose to approximately $46.1 billion by the end of January, up from $45.0 billion at the close of 2025. The improvement was driven by higher oil receipts, steady diaspora remittances, and sustained portfolio inflows. Forward projections suggest reserves could exceed $51billion by year-end, reinforcing the Central Bank’s capacity to manage currency volatility and absorb external shocks.

 

MACROS

Looking ahead to February 2026, inflation is expected to continue its gradual moderation, supported by base effects from the revised CPI methodology, stable exchange rate conditions, and easing food supply pressures. Headline inflation is likely to trend marginally lower or remain broadly stable in the near term. However, risks to this outlook include potential energy price shocks, changes to administered prices, or renewed exchange rate volatility, particularly if global commodity prices spike or domestic supply disruptions emerge.

The exchange rate is expected to remain relatively stable in February, with the naira likely to trade around the ₦1,400/$ level, supported by sustained portfolio inflows, improved reserve buffers, and ongoing price discovery at the NFEM window. Nonetheless, downside risks persist, including the possibility of capital flow reversals if global financial conditions tighten, heightened geopolitical tensions affecting oil markets, or delays in oil production recovery. Maintaining confidence in policy consistency and reform implementation will remain critical to preserving near-term currency stability.

The macroeconomic environment entering February 2026 reflects an improving balance, with stabilization increasingly anchored by structural reforms rather than temporary market interventions. While vulnerabilities remain, the convergence of moderating inflation, strengthening external buffers, and rising international confidence provides a more resilient foundation for economic and financial market performance in the months ahead.

The Nigerian equities market began 2026 on a relatively positive footing, extending the bullish momentum seen in late 2025. This performance was underpinned by improving macroeconomic signals that suggested early signs of economic stabilization, alongside renewed investor confidence. As a result, total market capitalization on the Nigerian Exchange (NGX) increased by ₦6.8 trillion during January, closing at ₦106.15 trillion compared to ₦99.38 trillion at the end of December 2025 

This 6.8% month-on-month expansion was largely driven by price appreciation in major blue-chip stocks, complemented by fresh capital inflows through primary market activities. Reflecting these gains, the NGX All-Share Index (ASI) delivered a strong start to the year, recording both month-to-date and year-to-date returns of 6.27% to close January at 165,370.40 points.

This performance was not an isolated development but broadly aligned with trends across global and Pan-African equity markets. Notably, the NGX outperformed several African peers, including the BRVM and the Moroccan exchange, which recorded more muted starts to the year.

 

Sectoral performance on the NGX in January 2026 largely reflected the broader market’s bullish tone, with most indices closing the month in positive territory as investors selectively rotated into high-conviction sectors. The Oil and Gas index emerged as the top performer, advancing by 13.80%, driven by price gains in key integrated energy stocks such as SEPLAT (+15.34%) and ARADEL (+16.45%). Institutional confidence was further reinforced by improved governance sentiment following strategic board appointments, including the induction of Mr. Tony Elumelu to Seplat Energy’s board.

The Insurance index followed closely, rising by 11.76% on the back of ongoing recapitalization efforts and broad-based price appreciation across the sector. Notable gainers included NEM Insurance (+19.40%), AIICO (+10.82%), Veritas Kapital (+43.27%), and Mutual Benefits Assurance (+34.84%), reflecting improving sentiment toward balance sheet strengthening and earnings recovery prospects.

The Banking index posted a solid 6.99% gain, supported by renewed interest in fundamentally strong lenders such as GTCO (+9.15%), Zenith Bank (+15.61%), Wema Bank (+14.71%), and Access Holdings (+7.62%), as investors positioned for resilient earnings and attractive dividend yields. Similarly, the Industrial Goods index advanced by 5.45%, driven largely by gains in Dangote Cement (+4.27%) and Lafarge Africa (+16.73%), amid sustained demand expectations within the construction value chain.

Meanwhile, the Consumer Goods index added 3.21%, extending its steady appreciation after emerging as the bestperforming sector in 2025. Gains in Nestlé Nigeria (+10.00%), Cadbury Nigeria (+11.85%), Unilever Nigeria (+8.33%), and Dangote Sugar (+8.33%) underscored continued investor preference for companies with relatively strong pricing power and improving margin outlooks.

Despite the NGX All-Share Index delivering a 6.27% return in January, stock-level performance was highly dispersed, creating meaningful alpha opportunities for active managers. Several mid- and small-cap stocks recorded outsized gains, driven by sector repositioning, low-float dynamics, and renewed speculative interest. Deap Capital Management & Trust Plc (+394.21%) and SCOA Nigeria Plc (+345.07%) led the advancers, while strong performances were also recorded in NCR Nigeria Plc (+173.73%), Zichis Agro Allied Industries Plc (+131%), particularly notable as a recent IPO, and Multiverse Mining, supported by improving sentiment in the mining and basic materials sector.

On the downside, a small number of stocks underperformed, largely due to profit-taking following extended rallies rather than fundamental weakness. Ikeja Hotel Plc (-23.03%) declined as investors locked in gains in the hospitality sector, while Juli Plc (- 9.93%) and Austin Laz (-8.24%) faced selling pressure amid rotation within the retail and services space. Conoil Plc (-9.72%) also recorded a modest pullback, standing out as a rare decliner within the Oil and Gas sector, with price weakness largely reflecting technical corrections.

Market direction in February is expected to be driven largely by the release of audited 2025 financial results and dividend announcements. Nigeria’s dividend season typically supports equity prices, as investors rotate toward fundamentally strong, high-yield stocks. The banking sector should remain the center of activity amid ongoing recapitalization, while potential large-scale listings, such as the anticipated Dangote Refinery IPO, present upside catalysts for market liquidity and capitalization. Continued traction on the Growth Board also points to a growing pipeline of SME listings, particularly in agriculture and technology. Macroeconomic risks remain centered on inflation trends and monetary policy. However, strong market capitalization and resilient earnings among large-cap stocks suggest the NGX is well positioned to sustain positive momentum into February 2026.

FIXED INCOME

Domestic Money Market and System Liquidity

The Nigerian fixed income market in January 2026 was characterized by ample system liquidity, shifting yield dynamics, and improved investor confidence following favorable macroeconomic developments.

Market sentiment was largely shaped by the moderation in headline inflation and the Central Bank of Nigeria’s decision to maintain a tight but stable monetary policy stance. These factors drove strong participation at primary market auctions and contributed to yield compression toward the latter part of the month.

A key catalyst was the National Bureau of Statistics’ release of December 2025 inflation data, which showed headline inflation easing to 15.15% from 17.33% in November. The decline was primarily attributed to revisions in the Consumer Price Index methodology, including rebasing to 2024 and the adoption of a 12- month average reference period. This perceived disinflationary trend supported fixed income demand and reinforced expectations of yield stabilization.

Against this backdrop, the CBN retained the Monetary Policy Rate at 27.0% at its January meeting, signaling policy continuity. The moderation in inflation expectations provided a tailwind for fixed income instruments, particularly at the long end of the Treasury curve, as investors increasingly priced in lower real yield pressures.

In the Treasury bills primary market, investor demand remained robust throughout the month. At the January 7 auction, the CBN offered ₦1.15 trillion across the 91-day, 182-day, and 364-day tenors, attracting total subscriptions of ₦1.54 trillion and a bid-cover ratio of 1.35x. Although stop rates increased across all tenors, clearing at 15.80%, 16.50%, and 18.47%, respectively, strong participation
underscored sustained appetite for short-dated government securities.

 

Demand intensified at the January 21 auction, where ₦1.15 trillion was again offered. Total subscriptions surged to ₦3.44 trillion, translating to a bid-cover ratio of 3.24x, with particularly strong interest in longer-dated bills. While stop rates for the 91-day and 182-day instruments edged higher to 15.84% and 16.65%, the 364-day bill cleared lower at 18.36%, reflecting growing investor preference for duration. The
relatively low allotment rate suggests that unmet bids are likely to flow into the secondary market.

Eurobonds and Global Confidence

Nigerian Eurobonds traded with mixed-to-moderately positive sentiment in January 2026, shaped by a combination of global macroeconomic developments, geopolitical risks, and improving domestic fundamentals. Early in the month, investor sentiment was cautious amid heightened global risk aversion, driven by volatility in energy markets, geopolitical tensions in the Middle East, and supply disruptions caused by severe winter storms in the United States. These factors contributed to short-term oil price volatility, with Brent crude briefly trading above USD70/bbl as markets repriced supply risks.

Additional uncertainty stemmed from concerns around U.S. foreign policy actions, including interventions in Venezuela, which raised the prospect of disruptions to global oil supply. Given Nigeria’s continued reliance on oil revenues, sustained volatility in crude prices remained a key macro risk, influencing foreign investor positioning in Nigerian sovereign debt during the early part of the month.

Mid-month sentiment improved as U.S. Treasury yields eased and oil prices stabilized following their initial spike. Softer U.S. jobless claims and the U.S. Federal Reserve’s decision to hold policy rates reinforced expectations of a prolonged pause through most of H1 2026, following cumulative rate cuts in late 2025. This shift supported renewed demand for emerging market debt, leading to modest yield compression across Nigerian Eurobonds.

By the latter half of January, buying interest strengthened, driving the average benchmark Nigerian Eurobond yield down to approximately 7.12%. However, profit-taking ahead of key global macro events and renewed upward pressure on U.S. Treasury yields toward month-end resulted in mild volatility, with the benchmark yield ticking higher to around 7.23% in the final trading sessions. Nigerian Eurobonds closed the month slightly weaker on a month-on-month basis, reflecting cautious investor positioning amid persistent global uncertainty.

FIXED INCOME

A major positive development during the month was Nigeria’s formal removal from the European Union’s list of high-risk third countries for money laundering and terrorism financing, which took effect on January 29, 2026. This followed Nigeria’s earlier exit from the Financial Action Task Force (FATF) grey list in October 2025, representing a significant improvement in the country’s international financial standing. The delisting is expected to reduce compliance costs for cross-border transactions, enhance correspondent banking relationships, and foster broader participation by foreign portfolio investors in Nigeria’s fixed income and Eurobond markets in the medium term.

OUTLOOK

The Nigerian fixed-income market is set for a gradual recalibration. With the CBN maintaining tight monetary conditions and ample liquidity, short-term NTB yields are expected to ease, providing investors with opportunities to secure attractive returns ahead of potential rate adjustments. Demand for longer-dated government bonds remains robust, supported by stable coupon payments and potential capital appreciation in a moderating yield environment.

Fiscal discipline and strategic debt management will be key. A shift toward lower-cost, long-dated instruments, including diaspora bonds, Sukuk, or green bonds, combined with efforts to diversify non-oil revenues, could enhance debt sustainability and bolster investor confidence. This outlook depends on continued macro stability, easing inflationary pressures, and contained external debt risks.

On the external front, while Eurobond issuances have drawn strong demand, global rate dynamics and geopolitical risks could pressure yields, underscoring the need for vigilance. Overall, highyield, long-term government debt and Tbills is likely to remain a preferred allocation in the near to medium term, contingent on stable macro fundamentals and consistent policy execution.

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December 2025 Inflation Report

Inflation eased to 15.15% in December 2025 following an adjustment by the NBS.

Nigeria’s headline inflation moderated to 15.15% year-on year in December 2025, down from 17.33% in November, reflecting a methodological adjustment by the National Bureau of Statistics (NBS). 

The decline follows the NBS’s adoption of a 12-month average CPI for 2024 as the reference period, replacing the previous single-month (December 2024) base. This change was implemented to eliminate an artificial inflation spike caused by base effects. Under the former methodology, headline inflation for December 2025 was projected to surge to about 31.2%, a distortion driven by the comparison base rather than a sharp acceleration in underlying price pressures. The revised approach, therefore, provides a more accurate representation of inflation dynamics, even as price levels remain elevated. 

On a disaggregated basis, food inflation eased to 10.84% in December from 14.21% in November, while core inflation moderated to 18.63% from 20.59%, reflecting a broad based slowdown in price momentum following the methodological adjustment. On a month-on-month basis, headline inflation decelerated to 0.54%, down from 1.22% in the prior month. Food inflation turned negative at 0.36%, compared with 1.13% in November, suggesting easing short-term price pressures, while core inflation slowed to 0.58% from 1.28% previously.

OUTLOOK

We expect headline inflation to maintain a downward trajectory in 2026, supported by a relatively stable exchange rate, which should help moderate imported inflation pressures. Additionally, a weaker global oil market, driven by a projected supply surplus, could further ease global energy prices. However, this presents a double-edged risk: while lower energy prices may reduce domestic fuel costs and ease transportation and logistics expenses, weaker oil prices could also dampen export earnings and exert pressure on the naira, potentially offsetting gains through higher import costs.

On balance, the anticipated disinflation trend may create room for the Monetary Policy Committee to begin a gradual pivot away from its current hawkish stance, should macroeconomic conditions remain supportive.

Y-o-Y Inflation Trend New CPI Series
Y-o-Y Inflation Trend Old CPI Series
M-O-M Inflation Trend New CPI Series
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