The average yield on Nigerian Treasury bills inched up to 18.36% at the start of the week as investors engaged in light sell-offs, responding cautiously ahead of the June inflation data release.
Market activity showed signs of mild pressure, with investors retreating from positions amid successive dips in naira asset yields. Analysts suggest this pullback reflects market anticipation that Nigeria’s ongoing economic reforms may be beginning to ease inflationary pressures.
Inflation cooled to 22.97% in May, but with the Central Bank of Nigeria maintaining its benchmark interest rate at 27.75%, real returns on government securities currently hover around 4.53%. Analysts said a further drop in inflation could push real returns above 5%, potentially creating room for monetary policy easing later in the year.
“There’s clear interest in naira assets, especially at the belly of the curve,” one analyst noted, citing strong demand for 178-day Treasury bills that drove their yield down by 64 basis points.
Market data showed yield contraction across the short (-2 bps) and mid (-14 bps) tenors, driven by selective buying. Notably, the yield on 73-day maturity bills fell by 3 basis points. However, selling pressure emerged at the long end of the curve, where investors booked profits on 297-day maturities, pushing yields up by 76 basis points.
Meanwhile, activity in the Open Market Operations (OMO) segment was relatively quiet, with average yields declining by 5 bps to 24.6%.
Despite limited overall trading volumes, the modest shifts across maturities underscore investor sensitivity to inflation trends and liquidity constraints, analysts said. They added that the Treasury bills market is likely to remain cautious in the short term, with further adjustments tied closely to inflation readings and central bank signals.
