In October 2025, the financial system saw improved liquidity, underpinned by the month-on-month decline in interbank rates, as the Open Buy Back and Overnight lending rates fell by 145bps and 151bps to 24.52% and 24.90%, respectively. We note that bulk of the improvement in liquidity was supported by higher SDF balances, as banks placement with the central bank reached NGN64.55trn in October 2025, higher than NGN50.73trn recorded in September.

On the flip side, banks borrowed only 322.00mn from the central bank through the SLF window, pointing to the absence of funding pressure amidst substantial liquidity. In addition, we highlight that interbank liquidity was further supported by inflows from FAAC disbursements, FGN coupon payments and OMO maturities which outweighed outflows from primary market auction settlements, including multiple OMO auctions. 

The outlook for the domestic fixed income market remains positive mainly due to the sustained improvement in the macroeconomic environment and further decrease in headline inflation. We anticipate another rate cut by the MPC later in November, following the 50bps cut implemented in the last meeting. This, coupled with the sustained interbank liquidity, is expected to bode well for the fixed income market and compress yields lower.

We expect stop rates to see modest decline at primary market auctions, driven by optimal interest from investors. However, we envisage cautious trading from investors amid potential downside risks emanating from Donald Trump s threat to Nigeria and lower crude oil prices, to name a few.

Kindly find HERE, the full report, covering our analysis and considerations.