October 7, 2026/Cordros Report
In September, global fixed income markets came under renewed pressure as the escalation in Middle East tensions heightened risk aversion and drove a sharp repricing across sovereign bond markets. US Treasury yields rose materially, with the increase amplified by elevated market volatility and persistent inflationary pressures, while the Fed’s restrictive policy stance further constrained expectations for near-term easing. African Eurobonds also reversed part of their recent recovery, with sovereign yields and risk premia widening as the global selloff and geopolitical uncertainty weighed on investor sentiment.
Domestically, Nigeria’s fixed income market remained firmly bullish, supported by the MPC’s larger-than-expected 350bps policy rate cut, the country’s re-inclusion into the JP Morgan Fixed Income Index universe and strong system liquidity. The resulting demand drove broad-based yield compression across Treasury bills, OMO bills and FGN bonds, with sizeable OMO maturities and unmet demand at primary auctions providing additional support.
Looking ahead, substantial market inflows from OMO and NTB maturities, alongside bond coupon payments, should sustain reinvestment demand and support further yield compression, particularly at the short end. However, the sterilisation of maturing liquidity through fresh auctions, a likely moderation in the pace of disinflation and a cautious monetary policy stance should limit the scope for a sustained, broad-based rally. Overall, domestic liquidity, government supply, foreign investor participation and the evolving global macroeconomic and geopolitical environment should remain the key drivers of market direction.