Yields on Nigerian Treasury bills remained broadly unchanged in the secondary market on Tuesday, as investors balanced profit-taking activity with selective demand for longer-dated instruments amid rising inflation expectations.
Trading activity was relatively muted, with investors trimming positions at the short and mid sections of the yield curve, while selectively adding exposure to longer maturities. This dynamic reflected cautious positioning ahead of anticipated inflation data that could reshape fixed-income pricing.
Market participants continued to show strong interest in longer-tenor government securities, viewing them as attractive in a high-yield environment. At the same time, portfolio rebalancing persisted across short- and mid-dated bills as investors adjusted to shifting macroeconomic signals.
Inflation Expectations Shape Market Sentiment
The treasury bills market is currently recalibrating in anticipation of a potential spike in inflation, which analysts warn could disrupt prevailing yield structures. This marks a notable shift from the aggressive repricing of spot rates observed in the final quarter of 2025, when tightening conditions dominated investor sentiment.
According to a market update released by AIICO Capital Limited, demand was most visible at the long end of the curve. The 7 January 2027 Treasury bill recorded improved buying interest, with its discount rate falling by 11 basis points to close at 17.83%.
Conversely, selling pressure was more pronounced in the mid-tenor segment. The 7 May 2026 bill experienced a sharp rate increase of 49 basis points, closing at 16.54%, reflecting reduced appetite for medium-term instruments.
Liquidity Supports Market Stability
Despite the mixed trading pattern, system liquidity remains robust, reducing the incentive for banks to offload treasury holdings to rebalance portfolios. Analysts say this liquidity cushion is likely to keep the market relatively stable in the near term, even as inflation risks loom.
Overall, the average yield across Nigerian Treasury bills closed unchanged at 18.02%, remaining well above the country’s most recent inflation reading and reinforcing the appeal of fixed-income securities in the current macroeconomic environment.
