WED AUG 19 2026-theGBJournal| Nigeria’s money and fixed-income markets showed mixed signals on Tuesday, with overnight funding costs edging higher despite a substantial ₦2.22 trillion liquidity injection from maturing Open Market Operations securities, while investors increased demand for Treasury bills and government bonds.
The overnight lending rate rose by 1 basis point to 22.2%, indicating that liquidity conditions remained relatively firm even after the sizeable OMO maturity inflow.
The increase suggests that the additional cash was not sufficient to materially ease near-term funding pressures, as banks continued to manage their liquidity positions cautiously.
In the Treasury bill secondary market, sentiment was more constructive, with the average yield falling by 1 basis point to 18.6%.
The move reflected stronger demand across parts of the curve as investors positioned in selected maturities.
At the short end, average yields declined by 1 basis point, supported by buying interest in the 79-day-to-maturity bill, whose yield fell by the same margin.
Demand was also evident at the long end, where average yields declined by 2 basis points, driven by a sharp 23-basis-point drop in the yield on the 359-day bill.
The mid-section of the Treasury bill curve, however, moved in the opposite direction. Average yields rose by 1 basis point as selling pressure pushed the yield on the 114-day bill 15 basis points higher.
The stronger performance in the longer-dated Treasury bill segment helped offset the weakness around the middle of the curve, leaving the overall market marginally bullish.
Activity was even stronger in the OMO segment, where the average yield declined by 8 basis points to 21.2%.
The sharper compression in OMO yields points to increased investor appetite for the instruments, despite the relatively tight liquidity environment reflected in the overnight market.
The bullish tone extended to the FGN bond market, where average yields fell by 4 basis points to 16.7% as investors stepped up buying across the belly and longer end of the curve.
The mid-curve segment recorded the strongest improvement, with average yields declining by 10 basis points. The move was driven by buying interest in the May 2033 bond, whose yield fell by 12 basis points.
Longer-dated bonds also attracted demand. Average yields at the long end declined by 4 basis points, supported by buying in the April 2037 bond, where the yield fell by a substantial 19 basis points.
The short end of the sovereign bond curve was unchanged, suggesting that investors were more willing to take duration risk than to aggressively reposition at the front end.
The divergent moves across the money market and fixed-income curve point to a market balancing two competing forces: persistent short-term liquidity tightness, reflected in the marginal increase in overnight funding costs, and stronger demand for sovereign securities as investors seek to lock in relatively attractive yields.
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