Market review Q2 2026

Market review Q2 2026 Macro-Economic Overview Headline inflation rose steadily throughout Q2 2026, increasing from 15.69% in April to 15.93% YoY in May. The uptick was largely driven by higher transportation and energy costs stemming from the Middle East conflict, which also filtered through to food prices. However, the month-on-month (MoM) inflation trend told a slightly different story, easing from 2.13% in April to 1.75% in May, reflecting a moderation in sequential price pressures in May amid easing geopolitical tensions. At the Monetary Policy Committee (MPC) meeting held on 19th and 20th of May, the Committee retained the Monetary Policy Rate (MPR) at 26.50%, while maintaining the Standing Facilities Corridor at +50/-450 basis points around the MPR. The Cash Reserve Ratio (CRR) was also left unchanged at 45% for Deposit Money Banks, 16% for Merchant Banks, and 75% for non-TSA public sector deposits. Crude oil prices remained highly volatile in Q2 2026, largely reflecting geopolitical developments in the Middle East. Brent crude averaged approximately $96.01/barrel during the quarter, trading between a low of $72.60/barrel and a high of over $120/barrel. Prices surged sharply in April amid supply disruption fears linked to tensions around the Strait of Hormuz but moderated through May and June as supply conditions improved and ceasefire efforts gained traction. Nigeria’s Composite PMI weakened during Q2 2026, declining from 53.2 points in March to 49.4 points in April before printing at 49.6 points in May. This signals a second consecutive month of contraction in business activity after 16 months of expansion. This can be largely attributed to weaker activity in the industrial and services sectors. As of 29 June 2026, Nigeria’s gross external reserves stood at $51.43 billion, representing a 4.45% increase from the $49.24 billion recorded as of 31 March 2026. The total FAAC disbursement in Q2 so far amounted to approximately ₦2.13 trillion. Interbank liquidity remained robust during the quarter, averaging approximately ₦4.84 trillion, peaking at around ₦7.78 trillion in late April and dipping to approximately ₦2.57 trillion in mid-June. Sources: FMDQ, CBN, NBS, Bloomberg Bond market The FGN bond market experienced a notable shift in sentiment during Q2 2026 as investors reassessed the outlook for interest rates and the government’s borrowing plans. Trading remained largely selective throughout the quarter, with the secondary market alternating between bargain hunting and profit-taking as investors searched for attractive entry levels. Yields remained broadly range-bound through the early part of the quarter as market participants cautiously positioned ahead of fresh supply. Although demand at the April auction was robust, the DMO maintained its disciplined stance, allotting only ₦276.8bn of the ₦700bn offered across the 2030s, 2032s, and 2035s, closing at 16.30%, 16.50%, and 16.59%, respectively. The restrained allotment helped keep yields relatively anchored despite healthy investor demand. In May, the DMO reopened the 2035s and 2037s, closing at 17.00% and 17.04%, respectively, signalling the beginning of an upward adjustment in market yields and setting the tone for a broader repricing in June.  The market turned more bearish towards the end of the quarter as increased sovereign issuance prompted investors to demand higher yields. Selling pressure emerged across the curve ahead of the June auction, pushing yields upward before demand resurfaced at the new levels. The DMO offered ₦1.20tn across the 2035s and 2037s, attracting subscriptions of over ₦1.41tn and allotting ₦1.22tn at marginal rates of 18.34% and 18.35%, respectively. The uptick in rates from the previous month underscores the market’s repricing of sovereign risk, as investors sought greater compensation to absorb the significantly larger supply of government debt. Treasury Bill market The Nigeria Treasury bills market recorded mixed performance in Q2 2026, as the strong liquidity driven bullish bias witnessed at the start of the quarter gradually gave way to a more cautious trading environment. While the robust market liquidity and investor demand compressed yields, the inflationary pressures, heightened geopolitical tensions in the Middle East and the Monetary Policy Committee’s decision to maintain a hawkish stance ultimately shifted market sentiments further in the quarter. In April, the ample liquidity drove strong demand, particularly on the short-term bills, as investors sought to preserve portfolio flexibility amid the uncertain economic environment. The bullish run compressed secondary market yields, while the Primary Market Auctions (PMAs) attracted over c. ₦5.30 trillion in subscription, signaling a healthy investor appetite. Market sentiments moderate in May, as inflation rose to 15.69% from 15.38%, coupled with the heightened US-Iran tensions reinforced expectations of a resistant monetary policy environment. Mid-month the MPC met and MPR was maintained at 26.50%, driving average yields to decline marginally by 6bps in May. The Marker was repriced sharply in June following the significant increase in both CBN and DMO issuance. The DMO revised its quarterly NTB issuance from ₦3.95trn to ₦4.80trn, with both June auctions receiving larger offer sizes of ₦1.00trn from ₦700bn and ₦450bn respectively. At the final NTB auction of the quarter (17-Jun), we saw allotments increase further to ₦1.49trn, with stop rates climbing sharply to 16.28%, 16.50% and 17.34%, respectively. The higher Primary market Stop rates triggered a broad repricing in the secondary market, driving yields higher across the curve. Consequently, the benchmark 1-year NTB closed the quarter c. 21.00% yield. The CBN floated seventeen (17) OMO auctions during the quarter, offering c. ₦10.20 trn across the tenors. Total sales during the quarter over c. ₦32.00 trn. Despite the oversubscriptions recorded at the auctions, there were two (2) no sale during the auctions. The DMO conducted six (6) NTB auctions during the quarter with each month recording an oversubscription of ₦5.32 trn, ₦4.40 trn and ₦4.02 trn respectively. In total the DMO oversold N1.34 trn, by allotting N6.14trn against the N4.80trn on offer. Eurobond Market Global macro conditions remained mixed during the second quarter of 2026. Major central banks paused their aggressive tightening cycles. The Federal Reserve maintained its funds rate at 3.50% to 3.75%, while the European Central Bank held rates before raising its deposit rate to 2.25% in June. Energy markets saw high volatility; Brent crude spiked

Fixed Income Quarterly – Q2 2024

Fixed Income Quarterly – Q2 2024 Macro-Economic Overview Nigeria’s inflation increased further, reaching 33.95% level in May, with food inflation at 40.66% and core inflation at 27.04%. At the MPC meeting held in May, the committee decided to increase the MPR further by 150bps to 26.25%, in a bid to remain steadfast in achieving price stability. The asymmetric corridor was retained at +100/-300 around the MPR, and the CRR and liquidity ratio was also retained at 45% and 30% respectively. Oil prices averaged $85.02/b this quarter, peaking at $91.21/b on the 5th of April. This spike was driven by the heightened geopolitical tensions and potential supply risk. Nigeria’s Gross Domestic Product (GDP) grew by 2.98% y-o-y (year-on-year) in real terms in Q1’2024, a decline from the 3.46% y-o-y recorded in Q4’2023. The service sector recorded the largest growth of 4.32% for the quarter and contributed 58.04% to the aggregate GDP. Coming from Q1, we witnessed a decline in the Nigerian FX reserves this quarter, due to the intervention by the CBN in the parallel market, to support the Naira. We recorded a low of $32.1bn, with a peak at c.$34bn late June. The eventual rise in the reserve can be attributed to increased crude oil prices, diaspora remittances, and foreign portfolio investment. Interbank liquidity averaged repo c.N184bn through the quarter, with a high of c.N951bn in late June and a low of repo c.N1.29trn mid-April. The Total FAAC disbursement for Q2 stood at c.N4.20trn with April recording the highest at c.N1.87trn. Sources: FMDQ, CBN, NBS, Bloomberg Market Performance in Q2-2024 Bond market The Bond market witnessed mixed sentiments through the quarter. Bullish bias commenced the quarter however, following the release of the quarterly bond calendar improved offers were seen across the bond curve. Post auction, buy interests continued, further stimulated by the increased inflation figures. Bullish sentiments continued into the second month, nonetheless, demand waned weeks into the month as players stayed on the sidelines while anticipating the auction and MPC outcome. Towards the end of May, the bond market saw slightly improved offers with a bit of cherry picking across board. Closing the quarter, minimal activity was recorded as players maintained the cautious stance while awaiting the auction for the month. Following the outcome of the auction, the bond yield curve adjusted with profit taking activities seen across board. Q-o-Q yields declined by an average of c.74bps across the curve. The DMO offered a total of N1.35trn at the bond auctions for the quarter across the 29s, 31s and May 33s. c.N1.3trn was sold through the quarter (vs. N1.78trn sub.), with stop rates closing the quarter at 19.64%, 20.19% and 21.50% respectively. Treasury bill market The quarter opened with bearish bias on the back of system illiquidity. This bias continued post first  auction, as players took profit especially on the new 1-year paper. However, pockets of demand emerged towards the end of April-2024 as participants looked to take advantage of the market levels. The second month started out with bullish sentiments amid scarce offers as players took on a cautious stance while anticipating the outcome of the MPC meeting. Following the MPC decision and FAAC inflow, demand intensified amid some profit taking activities. In the last month of the quarter, mixed sentiments were witnessed albeit, with a bearish tilt. Mid- month, we witnessed a bit of cherrypicking, albeitthe quarter closed out with the bears taking the centre stage. Q-o-Q, yields increased by an average of c.230bps across the Jul’24-Feb’25 maturities. The CBN floated seven OMO auctions during the quarter offering c.N3.05trn across the standard tenors. Sales through the quarter was about N2.0trn despite the oversubscriptions recorded at the auctions. Worthy of note is the no sale recorded at the penultimate auction floated in the quarter despite the N321.5b subscription. The DMO conducted seven auctions through the quarter with each month recording about 8x . 3.6x, 3.8x oversubscription respectively.  In total, the FG oversold c.N1.37trn across the standard tenors. Stop rates remained relatively stable through the quarter, however closing at 16.30% (vs. 16.24% Q1 ending), 17.44% (vs. 17.00% Q1 ending) and 20.68% (vs. 21.124% Q1 ending). Eurobond Market The SSA Eurobond market started the year with cautious optimism. The market in Q1 2024 has been influenced by a variety of factors, including global economic trends, geopolitical developments, central bank policies, and domestic economic conditions. Some nations reported improved economic growth and improved fiscal positions, supporting investor confidence in their sovereign bonds, while others grappled with challenges such as high inflation, fiscal deficits, and debt sustainability concerns. SSA sovereigns faced pressures at the start of 2024 due to fiscal concerns and a stronger dollar from a high interest rate driven by global central bank inflation-fighting policies via rate hikes. African countries are, however, now returning to the international debt capital market to access funds amidst sluggish economic expectations in 2024, as expectations of a possible global rate cut in 2024 continue to support investors’ interest. Global Economic Factors The SSA Eurobond market in Q2 2024 continued to be influenced by global economic trends, geopolitical developments, central bank actions, and domestic economic situations in each country. While cautious optimism from Q1 persisted, some headwinds emerged. Global factors such as the pace of anticipated rate cuts in the United States and ongoing geopolitical tensions, including the Russia-Ukraine war, contributed to market volatility. Inflationary pressures remained a concern, with some SSA countries facing rising prices. The US Federal Reserve’s stance on interest rates continued to be a key driver. The Fed maintained a cautious approach, with one rate cut implemented in May 2024. Further cuts are contingent on inflation data aligning with their target. Global economic growth showed signs of slowing down compared to Q1. Geopolitical tensions, particularly the ongoing war in Ukraine, continued to disrupt supply chains and exert upward pressure on energy prices. Country Event Nigeria Nigeria’s Eurobond market in Q2 2024 was marked by cautious stability. Key developments included: Economic Policies: The Central Bank of Nigeria (CBN) continued efforts to stabilize