Yield Steady as Nigeria’s T-Bills Maintain Inflation Protection Status
The average yield on Nigerian Treasury bills steadied amid mixed investor sentiment in the secondary market, while naira assets repriced across the fixed-income market segment.
Trading activity in the Treasury bills was largely quiet on Tuesday, with mixed undertones, as the short end (-6 bps) compressed while the long end (+4 bps) expanded.
Consequently, the average yield closed flat at 18.15% following a surge in spot rates on Treasury bills at the primary market auction last week. The return still surpassed the latest inflation reading, providing cover for consumer inflation.
The fixed income market is seeing a surge in spot rates following May inflation, which rose to 15.93%, and Nigeria’s stable benchmark interest rate of 26.5%.
The monetary authority has become more generous with spot rates pricing across Treasury and OMO bills, and the Debt Management Office also hiked bond rates in the last two auctions.
Nigeria’s fixed income market in the second half of 2026 is likely to remain characterised by slightly elevated yields, with the possibility of a modest upward repricing across the curve given the signs of increasing inflation, Zedcrest Securities Limited said in a note.
While the disinflation trend observed in early 2026 provided some room for monetary policy flexibility, structural fiscal pressures and external vulnerabilities -especially the US, Israel – Iran conflicts- are expected to sustain tight financial conditions.
The primary driver of yield direction in H2’26 will likely remain inflation risk.
The firm said although the Central Bank of Nigeria projects average inflation to moderate significantly in 2026, recent geopolitical tensions in the Middle East, particularly disruptions affecting global crude oil and energy markets, have reintroduced upside risks to imported inflation.
Nigeria’s consumer price index (CPI) for June is projected to top 16%, trailing average returns on naira-denominated assets and providing an inflation-protected return to investors. DMO Hikes Rates on Bonds to Meet N1.2trn Borrowing Target
