The Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.5% at the conclusion of its 305th Monetary Policy Committee (MPC) meeting, maintaining a cautious monetary stance amid renewed inflationary pressures and global economic uncertainty. The committee also left all key policy parameters unchanged, including the Cash Reserve Ratio at 45% for commercial banks and 16% for merchant banks, the Liquidity Ratio at 30%, and the asymmetric corridor at +50/-450 basis points around the MPR. The MPC noted that the decision to hold rates steady was influenced by the recent uptick in inflation, with headline inflation rising to 15.69% in April 2026 from 15.38% in March, reversing the earlier moderation seen at the start of the year. The committee emphasized the need to sustain macroeconomic stability, support exchange-rate stability, and prevent renewed inflationary risks from becoming entrenched. The decision follows the CBN’s 50bps rate cut in February 2026, which marked the first easing move after an extended tightening cycle.
Money Market
System liquidity saw a decreasing trend throughout the trading week, opening at ₦3.56 trillion on Monday, and closing at ₦2.79 trillion. Week-on-week, the Open Buy Back (OBB) held steady to close at 22.00%, likewise, the Overnight (OVN) rates held steady to close at 22.24%.
We expect the rate to continue to hover around this level.
Treasury Bills Market
The Treasury Bills market traded on a largely calm note throughout the week, with activity concentrated around the long end of the curve as investors cautiously navigated the primary market auctions. Early in the week, the 6-May bill traded within the 15.70%–15.90% range amid subdued investor appetite, while attention shifted toward the NTB auction where the DMO offered ₦650bn across the standard maturities. The auction recorded robust demand, with subscriptions printing at ₦1.99trn, although only ₦829.32bn was allotted, while stop rates closed unchanged at 15.95%, 16.14%, and 16.15% for the 91-day, 182-day, and 364-day tenors respectively. In the secondary market, yields remained broadly stable despite intermittent activity on the newly issued 364-day bill. Market sentiment was further shaped by the CBN’s aggressive liquidity mop-up operations through OMO auctions, where substantial allotments were made across short- and mid-tenor maturities at elevated stop rates. By week-end, the market maintained a relatively calm tone, with the 20-May bill quoted around 16.05%/15.90% as participants remained selective amid tight system liquidity and cautious positioning. Week-on-week, the average benchmark yield declined by 4bps to close at 17.37%.
We expect a calm week.
FGN Bond Market
The FGN bond market traded with a bearish undertone during the week as investors reacted to the weak primary auction outcome, elevated stop rates, and the MPC’s decision to maintain a tight monetary policy stance. At the start of the week, activity remained subdued ahead of the bond auction, where the DMO offered ₦300bn each on the 2035 and 2037 maturities. The auction was undersubscribed, with total subscriptions printing at ₦516.15bn and only ₦334.53bn allotted, while stop rates on the 2035 and 2037 bonds settled significantly higher at 17.00% and 17.04%, respectively, reflecting weak investor appetite at prevailing levels. This aggressive repricing filtered into the secondary market, prompting selling pressure across the mid-to-long end of the curve, with the 2035 maturity subsequently quoted around 17.15%/16.95% and later at 17.20%/17.00%. Midweek, the market adopted a cautious tone ahead of the MPC meeting, where the Committee held the MPR constant at 26.50% and retained all other policy parameters, triggering further upward repricing across the curve as investors adjusted expectations. Consequently, benchmark yields trended higher during the week, while activity remained relatively thin as market participants continued to source for higher yields. By week-end, the 2037 maturity traded around 17.10%/17.00%, reflecting the sustained bearish bias across the bond market. Week-on-week, the average benchmark yield increased by 19bps to close at 15.99%.
We expect similar sentiment to persist in the meantime.
FGN Eurobond Market
The Eurobond market experienced a volatile week, with sentiment largely driven by developments surrounding the U.S.-Iran peace negotiations and broader geopolitical tensions in the Strait of Hormuz. The week opened on a bearish note as stalled negotiations between Washington and Tehran, coupled with rising energy prices, pressured sentiment across the curve. Although reports of Pakistan transmitting a new Iranian peace proposal to the U.S. provided temporary relief, investor caution persisted amid uncertainty over the diplomatic process. Subsequent sessions saw sentiment swing repeatedly between optimism and risk aversion as President Trump alternated between signaling openness to negotiations and threatening military action should talks fail. Market optimism briefly improved following reports that Chinese oil tankers safely exited the Strait of Hormuz and comments suggesting negotiations were nearing a diplomatic resolution, which supported some compression in yields. However, renewed hawkish rhetoric from U.S. officials and Iran’s continued hardline stance on uranium enrichment reignited bearish sentiment later in the week. Despite these fluctuations, improving comments from both U.S. Secretary of State Marco Rubio and Iranian officials toward week-end helped restore some confidence, as both sides acknowledged narrowing negotiation gaps. Overall, Eurobond yields traded within a relatively tight range during the week, with market direction heavily dictated by geopolitical headlines and evolving expectations around a potential U.S.-Iran breakthrough. Week-on-Week, the average benchmark yield increased by 2bps to close at 6.92%.
We expect market direction to be driven by evolving geopolitical developments, Core PCE, and prelim GDP data.
Currency Market
The value of the Naira to the dollar declined by 0.32% week on week to close at ₦1,375.46/$ at the Nigerian Foreign Exchange Market Window (NFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) appreciating by 0.22% to close at 249,712.4. Market capitalization also increased marginally to close at 160.1 trillion. Market breadth was positive at 1.11x. Trading activity was subdued on the day, with the volume of shares traded decreasing by 32.76% to 711.8 million units, while total value of shares traded increased by 6.06% to ₦29.1 billion.
Reflecting the week’s performance, the NGX All-Share Index declined by 0.25%, as gains in ABCTRANS (+44.82%), ACADEMY (+29.79%), and UPL (+28.00%) were offset by declines in SOVRENINS (-22.45%), TRANSEXPR (-18.98%), and CAP(-14.85%).
Overall, the NGX has posted a year-to-date gain of 60.47%. Other notable indices are the NGX Top 30 Index (0.20%; -0.10% 1WK; +59.57% YTD), NGX Banking Index (0.25%; 1.11% 1WK; +59.43% YTD), NGX Oil & Gas Index (0.18%; 0.07% 1WK; +118.40% YTD), and NGX Insurance Index (-0.18%; -1.77% 1WK; 4.73% YTD).
