Nigeria’s annual inflation rate surged to 34.8% in December, its highest in nearly three decades, up from 34.6% in November, driven primarily by rising transportation costs, while food inflation eased slightly to 39.8%, and core inflation climbed to 29.3%. The National Bureau of Statistics (NBS) is set to revise its inflation measure with the next release, rebasing the consumer price index to 2024 and updating item weightings, with food’s share dropping from 51.8% to 40.1% and housing, energy, and electricity decreasing from 16.7% to 8.4%. In response to persistent inflation, the Central Bank of Nigeria (CBN) raised its benchmark interest rate by 875 basis points in 2024, with Governor Olayemi Cardoso expressing optimism about easing price growth this year ahead of the next policy rate decision on February 18.
Money Market
Market liquidity opened the day at ₦397.85 billion short. The Open Buy Back (OBB) rate and the Overnight (OVN) rate closed at 32.33% and 32.75%, respectively.
We expect rates to hover around current levels.
Treasury Bills Market
The FGN Treasury Bills Market witnessed an active session with demand driving yields lower on the 8 Jan 2026 bill which traded at 21.80% at the start of the week. In addition, trades were consummated on the 25 Nov OMO bill at 23.50% while the 20 Feb bill was quoted 24.70/24.50. At the close, trades were executed on the 8 Jan NTB as low as 21.35% while there was also an appetite for the Jan OMO bills but scarce offers. Week-on-week, the average benchmark yield declined by 37bps to 24.90%
We expect the appetite for bills to persist, albeit modestly ahead of the PMA.
FGN Bond Market
The FGN Bonds Market witnessed a quiet session at the start of the week with the 2031 maturity bid at 22.25% and offered 22.10% while the 19.00% 2034 bond exchanged hands at 21.10%. As the week progressed, we saw a reversal on the 31s to 22.50/22.30 and the 34s at 21.65/21.45 after the release of the Q1 bond issuance calendar featuring the re-opening of the 29s and 31s and addition of a new benchmark 10-year bond, 2035. Furthermore, the 38s was offered at 19.30 with no bids to match. Week-on-week, the average benchmark yield appreciated by 24bps to 19.51%
We expect improved offers across the curve.
FGN Eurobond Market
The FGN Eurobonds Market started off on a bearish streak after a strong Jobs Data the previous week. The selling pressure intensified ahead of inflation data on Wednesday. As the week progressed, market recovered off its lows as the U.S PPI data came in at 3.5% vs 3.8% forecast and 3.4% previous. The bullish trend persisted, buoyed by the U.S CPI data which came in line with expectations at 2.9% vs 2.7% prior. There was also the Retail Sales (MoM) data which increased by 0.4% vs 0.6% forecast and 0.8% previous. Overall, the week concluded on a bearish note. Week-on-week, the average benchmark yield declined by 11bps to 9.24%
We expect a modest recovery in prices.
Currency Market
The value of the Naira to the dollar declined by 30bps to close at ₦1546.72/$ at the Nigerian Foreign Exchange Market Window (NFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) appreciated by 17bps to close at 102,353.68. Market capitalization also increased, closing at ₦62.43 trillion. The market breadth was positive at 1.5x, with 33 advancers and 22 decliners. This performance was driven by gains in CAVERTON (+10.00%), SOVRENINS (+10.00%) and LIVESTOCK (+10.00%), and losses in ACADEMY (-9.74%), PZ (-9.09%), and DAARCOMM (-8.64%).
Trading activity was mixed on the day, with the volume of shares traded decreasing by 30% to 327.84 million units, while the total value of shares traded decreased by 20% to ₦11.81 billion. The most actively traded stocks by volume were ACCESS with 49.11 million units, FIDELITY with 20.39 million units, and UBA with 20.08 million units. In terms of value, BUAFOODS led with ₦1.97 billion, followed by ACCESS at ₦1.18 billion, and OANDO at ₦998.08 million.
Reflecting the day’s performance, the NGX All-Share Index reflected a 1-week decline of 3.01% with an overall year-to-date decline of 0.56%. Other notable indices are the NGX Top 30 Index (0.06%; -3.18% 1WK; -0.66% YTD), NGX Banking Index (-0.23%; -0.87% 1WK; 2.83% YTD), NGX Oil & Gas Index (1.05%; -0.87% 1WK; -1.64% YTD), and NGX Insurance Index (4.04%; -7.18% 1WK; 2.77% YTD).
