Global

According to the Office for National Statistics (ONS), headline inflation in the UK moderated to 3.6% y/y in October, following three consecutive months of flat readings (+3.8% y/y) – and in line with market expectations. The decline was driven by slower services inflation and easing core prices, which offset a mild uptick in food inflation. Specifically, services inflation (+4.5% y/y vs September: +4.7% y/y) eased, reflecting lower gas, electricity, housing and utilities costs. In contrast, food inflation (+4.9% y/y vs September: +4.5% y/y) edged higher, following broad-based price increases across categories such as bread, cereals, meat, fish, and vegetables. Nonetheless, core inflation, which excludes food and energy prices, also softened marginally to 3.4% y/y (September: +3.5% y/y), indicating a gradual easing of underlying structural price pressures. Month-on-month, consumer prices rose 0.4% y/y, after holding flat in September. Looking ahead, robust wage growth and persistent food price pressures are expected to keep inflation above the Bank of England’s 2.0% medium-term target, even as softer energy costs support a gradual disinflation trajectory. From a policy standpoint, the latest inflation print provides welcome relief and strengthens market expectations for the resumption of monetary easing. Accordingly, we anticipate that the Bank of England (BoE) will lower the Bank Rate by 25bps to 3.75% at its December 18 meeting.

According to the United States Bureau of Labour Statistics, total non-farm payroll employment in the US increased by 119,000 in the month of September (August: -4,000) – above market expectations (+50,000). The increase was primarily driven by higher employment in healthcare (+43,000), with growth concentrated in ambulatory health care services and hospitals, coupled with gains in food services & drinking places (37,000) and social assistance (14,000). Employment in social assistance (+14,000) also remained resilient, supported by continued hiring in individual and family services (+20,000). Conversely, federal government employment extended its downward trend, declining further by -3,000 jobs, resulting in cumulative job losses of 97,000 since its peak in January 2025. Despite the headline job gains, the broad-based unemployment rate inched higher to 4.4% m/m (August: 4.3% m/m), while the labour force participation rate settled higher at 62.4% m/m (August: 62.3% m/m). Average hourly earnings increased by 0.2% m/m to USD36.67, although the average workweek remained unchanged at 34.20 hours. Looking ahead, we expect Job growth to remain modest in the near term as overall momentum continues to soften. With employment gains largely concentrated in healthcare and other service-oriented sectors, and employment in cyclical industries showing limited progress, the underlying strength of the labour market appears to be weakening. This uneven pattern suggests a slower pace of job creation in the months ahead, particularly as businesses navigate ongoing policy shifts and trade-related headwinds.

Global Market

Risk-off sentiment dominated global equities this week as renewed scrutiny of AI and broader tech valuations drove a pullback across major markets. At the time of writing, US equities (DJIA: -3.0%; S&P 500: -2.9%) were on track to end the week lower, as persistent concerns around stretched AI and tech valuations overshadowed NVDA’s upbeat earnings and forward guidance. Sentiments were further dampened by solid jobs data, which led markets to scale back hopes of a rate cut next month. European equities (STOXX 600: -1.9%; FTSE 100: -1.8%) also declined, mirroring global market weakness. Optimism around potential BoE rate cuts – following an October inflation print largely in line with expectations – was offset by mounting concerns around overvalued global tech names. Across Asia, major indices (Nikkei 225: -3.5%; SSE: -3.6%) closed the week lower, tracking losses on Wall Street. Regional sentiment was further dampened by higher-than-expected inflation in Japan, the PBoC’s rate decision, and escalating Tokyo–Beijing tensions over Taiwan. Finally, the MSCI Emerging and Frontier Markets (MSCI EM: -1.0%; MSCI FM: -0.6%) indices declined, reflecting losses in China (-3.6%) and Romania (-1.4%), respectively.

Nigeria

Domestic Economy

According to the National Bureau of Statistics (NBS), consumer prices moderated for the seventh consecutive month, easing by 196bps to 16.05% y/y in October (September: 18.02% y/y). The slowdown was largely driven by a sharp deceleration in food inflation and a further moderation in core prices. Specifically, food inflation dropped by 375bps to 13.12% y/y (September: 16.87% y/y), reflecting a significant drop in the farm-produce basket due to increased market supply from the ongoing harvest, coupled with a moderation in imported food costs. Core inflation also eased by 84bps to 18.69% y/y (September: 19.53% y/y), supported by softer prices across several non-food items and imported categories, including furnishings, household equipment and maintenance, education services, health, recreation, sport & culture, and clothing and footwear categories. On a month-on-month basis, headline inflation edged higher by 21bps to 0.93% (September: 0.72% m/m) – the first increase since July. Looking ahead, we expect headline inflation to continue easing on an annual basis, supported by favourable base effects. However, month-on-month inflation is likely to edge higher in November as seasonal demand strengthens. Increased stockpiling ahead of the festive period would likely push prices higher, particularly in food, transport, and hospitality, resulting in a modest uptick in monthly inflation even as the annual rate declines. Accordingly, we project headline inflation to ease to 14.24% y/y in November (October: 16.05% y/y), while the m/m reading is likely to increase to 1.05% from 0.93% in October.

Federation Accounts Allocation Committee (FAAC) disbursements to the three tiers of government in November (reflecting revenue generated in October) declined marginally by 0.4% m/m to NGN2.09 trillion (October: NGN2.10 trillion). The slight moderation reflects lower receipts from Value Added Tax (VAT) and the Electronic Money Transfer Levy (EMTL), despite higher inflows from Petroleum Profit Tax (PPT)/Hydrocarbon Tax (HT), Company Income Tax (CIT) on upstream activities, CIT/Capital Gains Tax (CGT), Stamp Duties Tax (SDT), oil and gas royalties, import duty, excise duty, and CET levies. We estimate that the disbursed amount is 71.4% of the total gross revenue (NGN2.93 trillion) generated in the previous month, with the remaining balance allocated to transfers, interventions, and refunds (NGN724.60 trillion), as well as the cost of collection (NGN115.28 billion). Based on the stipulated sharing revenue formula, the FGN received NGN758.41 billion (October: NGN711.31 billion), State Governments received NGN689.12 billion (October: NGN727.17 billion), Local Governments received NGN505.80 billion (October: NGN529.95 billion), while oil-producing states received an additional NGN141.40 billion (October: NGN134.96 billion) as derivation (13% of mineral revenue).  In the near term, we expect potential revenue gains from two key sources: a possible improvement in domestic oil production and stronger Company Income Tax (CIT) collections supported by a firmer macroeconomic environment. However, stable exchange rates and softer global oil prices may limit FX-related gains on dollar-denominated revenues and dampen petroleum profit tax inflows, thereby constraining the overall pace of FAAC growth.
 
Capital Markets

Equities

Nigerian equities extended their losing streak for the fourth straight week as risk appetite remained muted. The softer inflation print – typically supportive of additional MPC easing – offered no relief, as sentiment remained decisively bearish. Specifically, the All-Share Index (ASI) declined by 2.2% w/w to 143,722.62 points, pressured by selloffs in DANGCEM (-10.0%), TRANSCORP (-9.1%), ZENITHBANK (-6.6%), UBA (-7.8%), MTNN (-1.1%), and ACCESSCORP (-10.9%). Consequently, MTD and YTD return moderated to -6.8% and +39.6%, respectively. Market activity also weakened, with trading volume and value declining by 63.6% w/w and 32.1% w/w, respectively. Sectoral performance was broadly negative as all major indices, Insurance (-7.1%), Industrial Goods (-4.5%), Banking (-3.9%), Oil & Gas (-1.9%), and Consumer Goods (-0.4%) closed lower.

Looking ahead, we expect trading to remain weak, with limited buying interest likely to keep the market under pressure. Nonetheless, market participants will also turn their attention to the outcome of next week’s MPC meeting, where we anticipate a 100bps policy rate cut as the Committee leans further into its easing cycle.

Money Market and Fixed Income

Money Market

This week, the average system liquidity level declined to a net long position of NGN4.37 trillion (Prior week: NGN5.09 trillion), as combined OMO PMA issuance (NGN3.88 trillion) and net NTB sales (NGN390.02 billion) outweighed inflows from OMO maturities (NGN1.36 trillion). Nonetheless, the OVN rate eased by 8bps to 24.8%, reflecting the continued overall liquidity support in the system.

Barring any liquidity mop-up by the apex bank in the coming week, inflows from OMO maturities (NGN489.37 billion) and FGN bond coupon payments (NGN14.99 billion) are expected to support system liquidity, likely putting downward pressure on the OVN rate. That said, the outcome of next week’s MPC meeting will likely influence the extent of any decline in interbank funding rates.

Treasury Bills

Bullish sentiment persisted in the Treasury bills market, supported by robust system liquidity and heightened expectations of a rate cut following October’s inflation print of 16.05% y/y, down from 18.02% in September. Consequently, the average yield across all instruments declined by 23bps w/w to 19.1%. By segment, NTB yields decreased by 3bps to 17.0%, while OMO yields closed lower by 26bps to 21.5%.  At Wednesday’s NTB PMA, the DMO offered NGN700.00 billion worth of bills – NGN100.00 billion for the 91D, NGN150.00 billion for the 182D, and NGN450.00 billion for the 364D tenor(s). Investor appetite remained strong, with aggregate subscriptions reaching NGN1.29 trillion, significantly overshooting the offer. Eventually, the DMO sold NGN1.09 trillion at stop rates of 15.30% (unchanged), 15.50% (unchanged), and 16.04% (unchanged), indicating sustained demand and market confidence at prevailing rates. Meanwhile, the CBN conducted an OMO auction on Tuesday, offering NGN600.00 billion across the 173D and 182D tenors. Total subscription settled at NGN3.77 trillion, with NGN2.98 trillion eventually allotted (Bid-to-cover ratio: 1.3x) at respective stop rates of 20.54% and 20.55%. The CBN conducted another OMO auction the following day (Wednesday), offering NGN600.00 billion across the 174D and 188D papers, allotting NGN903.35 billion at stop rates of 20.45% and 20.54%, respectively.

We expect next week’s market dynamics to be shaped by the outcome of the MPC meeting scheduled for November 24 – 25. At the meeting, we anticipate a further 100bps reduction in the MPR, bringing it to 26.0%.

Bonds

Similarly, the FGN bond secondary market was bullish this week, driven by heavy demand at the tail of the curve. Consequently, the average yield declined by 9bps w/w to 15.5%. Across the curve, the average yield increased at the short (+4bps) and mid (+6bps) segments following selloffs of the JAN-2026 (+32bps) and JUL-2034 (+17bps) bonds, respectively, while it decreased at the long (-39bps) end driven by demand for the APR-2049 (-44bps) bond. Notably, the DMO revised the November and December calendars, doubling the amount on offer to NGN250.00 billion (Previous: NGN160.00 billion) per instrument, resulting in a total of c. NGN500.00 billion offered in each month.

Looking ahead, trading in the FGN bond secondary market is likely to be influenced by Monday’s FGN bond auction (24 October), where the DMO will reopen the AUG-2030 and JUN-2032 bonds with increased supply. However, the broader direction of the market will largely depend on the outcome of the upcoming MPC meeting, which is expected to signal the stance of monetary policy and guide investor sentiment. 

Foreign Exchange

The naira depreciated this week by 1.5% w/w to NGN1,457.38/USD, as strong demand from corporates seeking to leverage available liquidity to secure imports ahead of the festive season outweighed the CBN’s USD250.00 million intervention to banks. Meanwhile, gross FX reserves increased for the eighteenth consecutive week, growing by a sizable USD476.43 million w/w to USD44.12 billion (November 20). In the forwards market, the naira rates depreciated across the 1-month (-0.9% to NGN1,484.82/USD), 3-month (-1.1% to NGN1,538.50/USD), 6-month (-1.5% to NGN1,615.46/USD) and 1-year (-2.3% to NGN1,768.72/USD) contracts.

The naira is expected to remain stable as FX liquidity remains robust. We expect the healthy FX reserves, favourable current account position, and firmer global monetary easing to reinforce foreign investor sentiment and stimulate FX market inflows.

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