Yields on Nigerian Treasury Bills (T-bills) edged lower on Wednesday as sustained investor demand in the secondary market continued to drive prices higher, following new data showing a slowdown in inflation. The renewed buying pressure reflects growing optimism among traders and institutional investors that the Central Bank of Nigeria (CBN) could soon ease its monetary policy stance.
According to market data, the average yield on Nigerian Treasury Bills declined to 17.39% as investors maintained strong interest in short-term government securities. This demand surge was influenced by recent disinflation trends, as the headline inflation rate fell to 18.02% in September 2025 — a significant drop from 20.18% recorded in August.
The decline in inflation effectively lifted the real interest rate to about 9%, improving the attractiveness of fixed-income returns. Analysts say the disinflation trend could prompt the CBN to lower its benchmark rate in upcoming policy meetings, as authorities aim to stimulate private sector-led economic growth.
Meanwhile, banks have maintained relatively high liquidity positions, which has further supported demand for T-bills in the secondary market. Market participants also noted that while a rate cut might reduce lenders’ earnings from interest income, it could improve credit access and overall market stability.
On the trading floor, the Treasury Bills market exhibited mixed movements across tenors. Yields on short- to medium-term instruments—specifically the one-month, three-month, and six-month bills—fell by 1, 4, and 6 basis points (bps), respectively.
The 8-October-2026 bill experienced a modest rate decline, shedding 8 bps to settle at 15.48%, while the 17-September-2026 bill recorded a marginal increase of 4 bps to 15.55%. Despite these isolated variations, the overall market sentiment remained bullish, as reflected by the slight average yield decline of 1 bp across the curve.
Traders noted that abundant liquidity within the banking system will likely sustain investor appetite for government securities in the short term. “The liquidity levels are strong enough to maintain positive momentum in the fixed-income space,” one trader commented.
Across market segments, yields contracted by 1 bp each on the short-, mid-, and long-term ends of the curve. The contraction was mainly driven by strong demand for instruments with maturities of 75 days (-1 bp), 155 days (-1 bp), and 358 days (-12 bps). Conversely, yields in the Open Market Operations (OMO) segment increased slightly by 4 bps to 20.5%, reflecting some divergence in investor positioning.
Analysts believe the combination of easing inflation and robust liquidity will continue to underpin demand for Treasury Bills in the near term. They added that a potential policy rate cut by the CBN could further compress yields, while maintaining the market’s bullish tone as investors lock in available returns before any policy shift takes effect.
Overall, the recent disinflation trend has enhanced investor confidence, reinforcing expectations of a stable and more accommodative interest rate environment in the coming months.
