October 2026, Edition 4
Financial Markets closed the week caught between rising sovereign borrowing costs, shifting liquidity and intensifying global risk, as Nigeria’s fixed-income auctions drove yield expectations, while equities retreated and the Naira weakened. The Debt Management Office (DMO) ₦1.75 trillion October FGN bond auction cleared all three re-opened maturities at higher stop rates, reinforcing bearish pressure on secondary-market bond prices, while the Central Bank of Nigeria’s (CBN) Open Market Operation (OMO) auction pushed stop rates higher across both tenors. The Nigeria Exchange (NGX) equities market eased by 0.13% week-on-week, despite a marginal increase in external reserves. Globally, diverging equity performance, volatile sovereign yields, and surging crude oil prices highlighted the tension between geopolitical supply risks and persistent inflation. With gold declining amid higher energy costs and shifting rate expectations, investors face a market increasingly shaped by the cost of capital, sovereign supply, and the search for relative value.
In commodities, prices closed higher Week-on-Week (WoW) at $103.27/bbl. (+1.83%) and $116.72/bbl. (+6.24%) for West Texas Intermediate (WTI) and Brent crude, respectively, while gold was at $3,993.96/oz. (-4.14%).
System liquidity rose 18.76% WtD, from ₦5.84 trillion to a peak of ₦8.39 trillion on Thursday, before closing at ₦6.94 trillion. Liquidity built up on ₦2.07 trillion in OMO maturities, ₦329.79 billion in NTB maturities, and ₦368.25 billion in coupon payments, partly offset by about ₦4.65 trillion in OMO and FGN bond sales. Money market rates eased modestly, with the Open Repo Rate (OPR) and Overnight (O/N) rate closing at 20.00% (0bps) and 20.36% (+2bps), respectively. In the Foreign Exchange (FX) market, the Naira traded within a range of $/₦1,331.80 and $/₦1,395.00, before closing at $/₦1,361.84 on Friday.
The fixed-income secondary market traded with a rolling bias across the week, as yields moved within relatively wide ranges across OMO, NTB and FGN bond maturities, reflecting shifting liquidity conditions, auction positioning and investor repricing. At the short end, OMO rates were generally volatile, with the 06-Apr OMO moving from offers around 16.90%–16.95% on Monday to 16.65%–16.70% by Tuesday and 16.55%–16.60% on Wednesday, before recovering toward 16.60%–16.70% on Thursday, while longer-dated OMO instruments remained elevated around 18.20%–18.75%. NTB average yields rose 5bps to 18.00%, driven by selling pressure in shorter maturities, while demand for longer-dated bills supported a 26bps decline to 18.32% on the 07-Oct-27 paper. In the FGN bond space, the Feb-2034 paper oscillated broadly between 16.80% and 17.12%, while the Sep-2036 ranged within 16.95%–17.27%, highlighting persistent two-way interest rather than a uniform directional move. The Jun-2038 likewise fluctuated between roughly 16.75% and 17.40%, with yields firming at 17.12% before easing, while the Jun-2053 remained relatively stable around 15.00%–15.10%. Overall, the week’s price action reflected a choppy, reprice-driven market, with investors strategically adjusting positions across the curve rather than establishing a sustained bullish or bearish trend; the volatility was particularly evident in the belly and longer maturities as participants weighed prevailing OMO yields, upcoming supply, and the relative return on tenor rotation.
FGN Bond Primary Issuance: The October 19, 2026 auction signals a clear repricing of sovereign risk and renewed upward pressure on the long end of the fixed-income curve, with all three re-opened instruments cleared at higher stop rates than their previous auction closing rates: the FEB 2034 at 16.99% (+149bps), SEP 2036 at 17.29% (+50bps) and JUN 2038 at 17.19% (+34bps). Demand was strong in the 2036 and 2038 maturities at 1.16x and 1.15x, with a weaker print of 0.61x for the 2034 paper amidst its high coupon rate. The Bid-to-cover ratio was 3.30x, 1.18x, and 1.48x, respectively, for the2034, 2036, and 2038 instrument. The DMO nevertheless allotted 70.1% competitively against ₦1.75 trillion in subscriptions. The inclusion of ₦800.00 billion in non-competitive bids further lifted total allotments to approximately ₦2.02 trillion, above the ₦1.75trn competitive offer, with the 2036 absorbing 58.4% of market allotment, suggesting investors were more willing to extend duration at higher clearing yields. Overall, the auction outcome was bearish for secondary-market bond prices in the near term, with the broad upward movement in stop rates reflecting investors’ demand for higher compensation amid a substantial increase in Q4 domestic issuance.
FGN Bond | 19.00% FEB 2034 | 16.79% SEPT. 2036 | 15.45% JUN. 2038 |
Maturity Date | 21-02-2034 | 16-09-2036 | 21-06-2038 |
Amount Offered (₦’B) | 500.00 | 800.00 | 450.00 |
Subscription (₦’B) | 304.08 | 925.35 | 518.32 |
Non-Competitive Bid (₦’B) | 400.00 | 400.00 | 0.00 |
Amount Allotted (₦’B) | 92.14 | 781.31 | 350.72 |
Stop Rates (%) | 16.9900 | 17.2900 | 17.1900 |
Previous Stop Rate (%) | 15.5000 | 16.7900 | 16.8500 |
Money Market Issuance: The October 22, 2026, OMO auction reflected a firming in short-dated yields, with the 138-day and 180-day stop rates rising by 41bps and 22bps to 17.63% and 17.14%, respectively, indicating continued repricing pressure despite the broader liquidity environment. Demand was notably stronger at the longer tenor, where demand was 1.85x against offer, with an allotment of 1.77x, equivalent to 65.0% of total bids; by contrast, the 138-day tenor attracted an undersubscription of 0.87x, although 0.86x was allotted. Effective yields increased to 18.89% (+39bps) and 18.72% (+24bps), respectively, for the 138- and 180-day bills. The divergence indicates investors were willing to commit liquidity at the 180-day tenor despite its lower stop rate, potentially reflecting a preference for locking in current yields amid expectations of evolving monetary and liquidity conditions. Overall, the auction points to persistent demand for OMO instruments but at increasingly differentiated pricing across tenors, with the upward adjustment in stop rates signalling that the market continues to require higher yields to absorb supply, particularly at the shorter end.
AUCTION DATE | TENOR | OFFER (₦‘ B) | BIDS (₦‘ B) | TOTAL SALE (₦‘ B) | STOP RATES (%) | PREVIOUS TENOR RANGE STOP RATES (%) |
22-10-2026 | 138-DAY | 1000.00 | 875.24 | 815.24 | 17.6300 | 17.2200 |
180-DAY | 1000.00 | 1,852.82 | 1,773.28 | 17.1400 | 16.9200 |
The Naira experienced volatility during the week in the Nigerian Foreign Exchange Market (NFEM), declining by ₦28.22 (+2.11%) WtD, and ₦29.58 (+2.22%) WoW, closing at $/₦1,361.84 (WoW: $/₦1,332.26), this marked the largest weekly decline since March 6, 2026, when the Naira fell by ₦15.23. Foreign reserves rose from $55.09 billion to $55.16 billion (+0.13%) as of October 22, 2026, while blocked funds improved by 1.33% to $510.92 million from $504.21 million, with the blocked reserve ratio up at 0.92% (+1bps), reflecting improved foreign exchange conditions and receipts amidst external pressures.
Across the African continent, recent developments reflect a complex macroeconomic landscape marked by bold corporate expansions, fiscal shifts, and regional vulnerabilities. In corporate and financial sector milestones, Africa’s richest man, Aliko Dangote, expanded his energy footprint by acquiring a 25% stake in the Kenya Pipeline Company for $327 million alongside plans for a subsequent $1.5 billion network expansion, while JPMorgan deposited $38 million with the CBN in its pursuit of a local banking license as an Approval-in-Principle (AIP) was granted to establish a new merchant banking subsidiary, operating under the name JPMorgan Merchant Bank Nigeria Limited with a specialised scope of business such as corporate finance, investment banking, advisory, and capital raising. In fiscal and sovereign policy updates, South Africa unveiled a mid-term budget introducing new spending rules and projecting a historic decline in its debt-to-GDP ratio for the first time in over two decades, supported by an increased September inflation print according to Statistics South Africa (Stats SA), with their headline inflation rate at 4.50% YoY in September 2026, from 4.40% YoY in August, marking the second consecutive month of increase amidst surging energy costs, moving inflation further above the South African Reserve Bank’s (SARB) target of 3.00%. Conversely, sovereign headwinds intensified elsewhere: Senegal’s opposition leader Ousmane Sonko threatened to block the revised 2026 budget and spending plans, placing a vital IMF bailout at risk; Cameroon faced steep bond market losses following a credit downgrade amid concerns over political succession; and Egypt’s pound weakened to a multi-year low against the dollar, weighed down by regional geopolitical tensions and Red Sea security spillovers.
The NGX equities market experienced a bearish session, rebounding to a close with the benchmark ASI closing at 247,222.00 points, marking a 0.13% decline with market capitalization contracting to ₦160.52 trillion from ₦162.02 trillion WoW from the prior week’s close of 247,539.73 points, a trajectory heavily shaped by sharp day-to-day volatility and late-week institutional profit-taking. The session started on a notably weak footing on Monday, when intense selling pressure across all key banking and consumer sectors dragged the ASI down 0.91% to close at 245,278.34 points. A minor mid-week recovery occurred on Tuesday, as selective buying in high-cap industrial tickers lifted the index by 0.26% to 245,911.12 points. However, the bears quickly reassumed control on Wednesday, driving a 0.32% decline to 245,116.48 points as investors eagerly cashed out of liquid banking assets. The retreat culminated on Thursday, with the index shaving off an additional 0.065% (159.55 points), extending the broader weekly downtrend to 60 decliners against 23 gainers, and 71 remain unchanged on Friday despite rallying up by 0.92%. Pulling the YtD lower at +58.87% from +59.07%. This relentless daily erosion was primarily fuelled by systemic profit-taking in heavyweight financial stocks like ZENITHBANK and GTCO, though pockets of defensive support periodically emerged through strategic capital rotation into the FIRSTHOLDCO, DANGCEM, NGX Premium, Industrial, and Growth indices. Sectoral performance indices WoW were Insurance (-2.79%), Oil & Gas (-2.55%), Banking (-0.67%), Consumer Goods (-0.55%), and Industrial (+1.95%)
First HoldCo Plc delivered a strong 9M 2026 performance, with profit before tax rising 60.84% YoY to ₦911.24 billion, despite a 16.02% decline in net interest income to ₦1.26 trillion. Earnings were supported by a 48.08% increase in net fee and commission income to ₦316.43 billion, a turnaround in fair-value gains to ₦104.59 billion, higher FX gains, and a 28.32% reduction in impairment charges to ₦207.10 billion. Total assets grew 18.15% to ₦32.20 trillion, driven largely by a 47.92% expansion in investment securities to ₦10.31 trillion, while customer deposits increased 21.32% to ₦22.91 trillion. Although the shares remained up 173.49% YtD at ₦131.00, they declined 18.07% in October, highlighting a disconnect between strong fundamentals and near-term market positioning.
Global financial markets navigated a delicate balance between resilient real-economy activity and sticky inflationary pressures, as the International Monetary Fund (IMF) revised its global economic growth forecast upward to 3.10% from 3.00% in July, though down from 3.50% in 2025; projected to rebound to 3.70% in 2027. Equity markets traded under steep pressure, particularly across technology and AI-related infrastructure sectors, despite strong corporate earnings; 84% of reporting S&P 500 companies beat expectations, driving US Q3 annualized profit growth to a blended rate of 29.0%. The equities market performance closed negative WoW; the Nasdaq Composite at 25,955.34 (-0.71%), the S&P 500 at 7,623.68 (-0.46%), and the Dow Jones Industrial Average at 52,215.16 (+0.41%). Across Europe, Germany’s DAX 40 was at 25,181.65 (-1.72%), while the FTSE 100 was at 10,690.36 (-1.76%), and the Stoxx 600 at 635.77 (-1.39%). Asian markets were mixed, with Japan’s Nikkei 225 at 62,693.16 (-4.03%), China’s Shanghai Composite Index at 3,690.48 (-0.69%), Hong Kong’s Hang Seng Index at 23,093.37 (-4.52%), and South Korea’s KOSPI at 5,550.30 (-2.08%). Higher borrowing costs continued to weigh heavily on rate-sensitive sectors such as US housing, where starts plunged 5.2% month-on-month to an annual rate of 1.221 million units and building permits ticked down 0.2% to an annualized 1.400 million units. Fixed income markets experienced a sharp, safe-haven flight to quality late in the week due to escalating Middle East supply risks and sudden AI-spending growth concerns which triggered a massive single-day rally in sovereign paper; the US 10-year Treasury yield, which had spent weeks hovering over 5.10%, plummeted by nearly 20 basis points to close around 5.00%. Concurrently, the UK 10-year Gilt yield held firm near multi-year highs around 5.33%–5.40%, driven by hotter-than-expected UK CPI rising 3.60% YoY in September 2026 from 3.30% in August 2026(marking a third month rise) driven by transport and high energy costs, while core inflation rose to 2.80% from 2.60%, as goods and services inflation increased to 3.20% (from 2.70%) and 3.70% (from 3.40%) in August 2026, respectively, alongside a tight labour market with unemployment dropping to 4.70%, cementing expectations for further central bank rate increase. Globally, macroeconomic updates reinforced this nuanced trajectory: Japan’s core inflation held steady at 2.1% YoY to bolster Bank of Japan tightening expectations, Canada tracked core inflation within a sticky 1.8% to 2.0% range, and China provided a modest growth counterweight as Q3 GDP accelerated to 4.50% YoY from 4.20% in Q2, 2026, growth was largely driven by a surge in high-tech manufacturing (15.3% YoY in September) and exports, on stronger industrial output rising by 5.5%, while domestic retail sales remained slow at 1.1%, leaving risk assets constrained by elevated real yields and volatile energy markets.
Gold and oil markets moved in opposite directions through the week as geopolitical risks, inflation concerns and shifting expectations for US monetary policy drove cross-asset positioning: gold declined from $4,143.98/oz on Monday to $3,993.96/oz on Friday, a 3.62% weekly drop, with the metal pressured by rising oil prices, hotter-than-expected US inflation data and expectations that interest rates could remain elevated for longer, although softer expectations for further Fed tightening later in the week offered some support. Crude oil rose from $101.09/bbl. to $103.27/bbl., while Brent climbed from $108.34/bbl. to $116.72/bbl., as renewed Houthi attacks, heightened tensions around Iran, and concerns over potential disruptions to Middle Eastern supply outweighed improving flows through the Strait of Hormuz. The divergence highlights the market’s current inflationary dilemma: higher oil prices are reinforcing inflation risks and potentially extending the higher-for-longer rates narrative, weighing on non-yielding gold, while escalating geopolitical risks continue to add a premium to crude. Oil remains supported by supply-risk concerns, while gold remains vulnerable to the interaction between energy-driven inflation, cross-asset rotation impact, and the Federal Reserve’s policy outlook.
The new week is positioned to be a heavy week, with the scheduled interest rate decision from the U.S. Federal Open Market Committee (FOMC) as a key market direction determinant; a rate hike slows economic growth and pressures stock prices by increasing borrowing costs, whereas a rate hold stabilizes markets by keeping credit conditions unchanged as well as increased cross-asset rotation. Locally, Nigeria is expected to receive liquidity inflows of more than ₦2.70 trillion, comprising ₦2.41 trillion from OMO maturities, NTB maturities of ₦130.72 billion, and ₦260.67 billion from coupon payments for Apr. 2029, 2032, and 2049; thereby supporting the cash-awash liquidity system that could influence money-market rates, asset allocation, and the direction of fixed-income yields.
Expected dividends: PZ Cussons Nigeria Plc and Zenith Bank Plc are scheduled to pay dividends of ₦2.50 (subject to AGM approval) and ₦1.50 per share, respectively, to qualified shareholders on October 30, 2026.
By: Sandra A. Aghaizu
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