March 12, 2026/Cordros Report
In February, US Treasury yields experienced a broad-based rally as a bull-flattening dynamic took hold. During the month, the average yield across the US curve declined by 13bps m/m to 3.77%. This move was led by the long end of the curve, where yields fell by an average of 26bps m/m to 4.61%. In contrast, the short end remained relatively more stable, easing by a modest average of 2bps m/m to 3.61%. This was bolstered by a fragile geopolitical backdrop involving renewed US–Iran tensions, the reintroduction of 10.0%–15.0% tariffs and a broadly resilient domestic economy.
Regionally, African Eurobond yields compressed by 11bps m/m to 7.83%, supported by a coordinated policy pivot, higher commodity prices and low global rates. Central banks in Ghana, Egypt, Kenya, and Nigeria implemented rate cuts as inflation moderated across the continent. Notably, Angola’s 9-year paper saw significant compression of 39bps m/m.
Domestically, Nigeria’s market extended its bullish run. Average Treasury bill yields plunged 105bps m/m to 17.18%, while bond yields declined 94bps m/m to 15.54%. The rally was supported by ample system liquidity and pronounced spillover demand from the primary market, reflected in NTB subscriptions of NGN8.87 trillion against an eventual allotment of NGN2.86 trillion. The CBN strategically shifted toward shorter-tenor OMOs (8–99 days) with stop rates at 22.39% and 19.48%, focusing on cost-containment and liquidity management. System liquidity rebounded to NGN3.63 trillion by month-end, bringing OVN rates down to a range of 22.2%–23.2% from late-January peaks.
In March 2026, fixed income yields are expected to maintain a downward trajectory, reinforced by an estimated liquidity injection of NGN7.98 trillion from maturities and coupon payments. Domestically, ongoing disinflation is anticipated to provide room for further measured monetary easing, likely resulting in a bull steepening of the curve as short-end yields adjust to potential rate cuts while longer tenors remain anchored by structural demand. Globally, US Treasury yields may edge marginally higher as the Federal Reserve evaluates Middle Eastern tensions and energy-driven inflation. Despite this, African Eurobonds are projected to remain well-supported, with potential for further spread compression as global risk appetite normalizes and investors rotate back into higher-yielding sovereign credits.
