Nigeria’s treasury bills market witnessed a dip in average yield to 21% as investors ramped up demand ahead of the country’s inflation report, spurred by strategic positioning in naira-denominated assets.
Investor appetite remained resilient, despite falling real returns due to disinflation. Market participants displayed active interest across mid- and long-tenure instruments on Monday, although shorter-term bills saw slightly reduced traction owing to expectations that rebased inflation figures might reverse previous trends recorded in March.
The average treasury yield contracted by 2 basis points to close at 21.0%, with distinct contractions seen in both the short (-3 bps) and mid (-3 bps) ends of the yield curve. Among the most sought-after were the 10-day and 178-day maturity instruments, whose yields dropped by 4 bps and 3 bps respectively.
While the overall level of activity remained tepid, targeted demand at the longer end of the curve helped stabilize yields, albeit amid limited supply. At the close of trading, short- and long-term yields declined by 7 bps and 11 bps respectively, ending at 18.83% and 22.79%.
However, the mid-segment of the curve diverged from the general trend, witnessing an increase of 14 basis points to 19.70%. In the secondary market for Open Market Operation (OMO) bills, the average yield decreased slightly by one basis point to 26.9%, reflecting moderate investor confidence.
These yield movements signal that the fixed income market remains highly responsive to macroeconomic indicators and central bank expectations. While inflation pressures may reassert themselves, market players appear to be hedging their positions for potential monetary policy recalibrations in the near term.
