Global Economy
The Federal Open Market Committee (FOMC), at its October 2025 meeting, voted to cut the federal funds rate by 25bps to a target range of 3.75% – 4.00%, in line with market expectations, marking the lowest policy rate level since 2022. The Committee noted that the decision was driven by mounting risks in the labour market in recent months, as reflected in the rising unemployment rate and slower job creation.
At the same time, the Fed acknowledged a renewed uptick in inflationary pressures, with headline inflation drifting further above the 2.0% target, amid persistent cost pressures from energy, housing, and services. In providing forward guidance, the Fed reiterated its data-dependent policy stance but cautioned that the ongoing federal government shutdown has restricted access to key economic data releases — including employment, retail sales, and inflation reports — forcing policymakers to adopt a more cautious and reactive approach in the near term. W
hile the Fed did not rule out the possibility of an additional 25bps rate cut at its December meeting, it indicated that such a move could prove more challenging than the October decision, given the limited availability of real-time economic data. Going forward, the Fed is likely to remain cautious and data-dependent, as the government shutdown limits access to key economic indicators. Given the uncertainty surrounding inflation and labour market conditions, policymakers may opt to pause further rate cuts in the near term until clearer data emerges.
Consequently, market expectations for another rate cut have eased, with the CME FedWatch tool now assigning a 66.8% probability (down from 91.7% a week ago) of a 25bps rate cut at the December policy meeting.
At their recently concluded October policy meeting, the Governing Council of the European Central Bank (ECB) opted to keep the three key interest rates unchanged for the third consecutive time. Specifically, the deposit facility was held at 2.00%, while the main refinancing operations and the marginal lending facility were maintained at 2.15% and 2.40%, respectively.
The Committee acknowledged that inflation has converged toward the ECB’s 2.0% medium-term target, and its assessment of the inflation outlook remains unchanged. It also noted that the economy has continued to expand, supported by a resilient private sector, a robust labour market and lower interest rates. Thus, the Committee judged that maintaining current rates remains appropriate to ensure that inflation stays sustainably aligned with the target over the medium term.
During the press conference, ECB President Christine Lagarde described the Eurozone as being in a “good place,” as recent global developments – the US-EU trade deal, the Middle East ceasefire, and progress in US-China trade talks – have eased growth risks. Nonetheless, inflation is expected to fall below target next year, suggesting a more balanced economic outlook. While the committee provided no explicit forward guidance, they reaffirmed a data-dependent, meeting-by-meeting approach to policy decisions. In our view, this tone suggests the ECB may adopt a wait-and-see posture in the near term, likely keeping rates steady at their next policy meeting on December 18, while closely monitoring underlying inflation trends, wage dynamics, and external risk factors, particularly on the trade front, before making further policy adjustments.
Global Market
Trading in the global equities market was mixed this week as investors assessed developments in US-China trade relations, a series of corporate earnings releases, and monetary policy decisions by the US Fed, ECB, and BoJ, alongside key economic data across major economies. At the time of writing, major US indices (DJIA: +0.7%; S&P 500: +0.5%) were poised to close higher, supported by largely anticipated outcomes from the Trump–Xi meeting, solid Q3 earnings from mega-cap technology firms (Alphabet, Amazon, Apple, and Microsoft), and a 25bps Fed rate cut in line with expectations.
In Europe, equities (STOXX Europe 600: -0.2%; FTSE 100: +1.2%) posted a mixed performance, buoyed by gains in banks, miners, and defence stocks, as well as better-than-expected corporate earnings, though tempered by muted reactions to the ECB’s decision to hold rates, Eurozone GDP data, and Germany’s inflation. Across Asia, major markets (SSE: +0.1%; Nikkei 225: +6.3%) advanced, supported by optimism over deeper US–Japan ties, sustained optimism around artificial intelligence, and the BoJ’s decision to maintain its policy stance. Meanwhile, the MSCI Emerging Markets (MSCI EM: +1.6%) index rose on strong gains in Taiwan (+2.6%), while the MSCI Frontier Markets (-0.6%) index declined, weighed by losses in Vietnam (-2.0%).
Domestic Economy
According to data from the Central Bank of Nigeria (CBN), Credit to the Private Sector (CPS) declined by 4.4% y/y to NGN72.53 trillion in September 2025 (September 2024: NGN75.83 trillion), despite the MPC’s pivot to monetary easing at its September meeting. We believe the decline reflects the lagged impact of the CBN’s prolonged tight monetary policy stance prior to the easing cycle.
Similarly, credit to the government fell sharply by 38.8% y/y to NGN24.16 trillion (September 2024: NGN39.47 trillion), indicating reduced government borrowing from domestic banks for deficit financing. Overall, broad money supply (M3) rose slowly by 7.7% y/y to NGN117.78 trillion, reflecting increases across narrow (+9.1% y/y) and quasi (+7.0% y/y) money supply. On a month-on-month basis, the CPS fell by 4.4% (August: -0.3% m/m to NGN75.88 trillion).
Looking ahead, we expect the MPC’s recent pivot toward monetary easing to support a gradual recovery in credit to the private sector (CPS) over the near to medium term. Softer financing conditions, coupled with improved liquidity in the banking system, should encourage lending activity and ease credit constraints on businesses and households.
Based on data obtained from the National Communications Commission (NCC), Nigeria’s active telephony subscribers rose moderately by 1.3% m/m to 171.57 million in August (July: 169.33 million). The improvement primarily mirrors the ongoing SIM reactivation drive led by major network operators, notably MTN Nigeria and Airtel Nigeria, as efforts to restore previously deactivated lines under the NIN-SIM linkage policy continue to gain traction. The total number of internet subscribers also improved slightly, rising by 1.1% m/m to 140.33 million (July: 138.75 million), supported by higher data service uptake amid growing digital adoption across sectors.
On a year-on-year basis, average telephony and internet subscriptions increased by 7.6% and 6.8%, respectively, indicating a rebound in subscriber activity and network connectivity following the successful completion of the NIN-SIM linkage exercise, which had previously disrupted subscriber acquisition and retention. The market structure remains highly concentrated, with MTN Nigeria maintaining its dominant position, holding a 52.1% market share (89.64 million subscribers), significantly ahead of Airtel Nigeria at 26.5% (58.07 million).
Globacom held a modest 12.3% share (20.91 million), while 9mobile (now T2 mobile) continued to lag significantly, accounting for just 1.6% (2.73 million) of total subscriptions. Looking ahead, we anticipate that ongoing SIM reactivation efforts, coupled with reduced regulatory pressures and continued network expansion, will sustain the recovery in the subscriber base. MTN Nigeria and Airtel Nigeria are expected to drive this growth, leveraging their strong market presence, brand recognition, and extensive distribution networks.
Capital Markets: Equities
Profit-taking activities dominated the local bourse this week, with the market closing lower in four of five trading sessions, halting its seven-week winning streak. Investor sentiment was dampened by a mixed batch of corporate earnings releases, which triggered cautious positioning. Consequently, the All-Share Index (ASI) declined by 1.0% w/w to 154,126.45 points, driven by sell-offs in ZENITHBANK (-6.3%), GTCO (-3.2%), DANGCEM (-0.8%), WAPCO (-3.5%), ARADEL (-1.0%), and UBA (-4.6%).
As a result, month-to-date and year-to-date returns moderated to +8.0% and +49.7%, respectively. Market activity improved as average trading volume and value rose 102.7% w/w and 12.2% w/w, respectively. Meanwhile, sectoral performance was broadly negative, with declines in the Insurance (-3.5%), Consumer Goods (-2.7%), Banking (-2.1%), and Industrial Goods (-1.0%) indices, while the Oil & Gas (+0.3%) index was the lone gainer.
Next week, we expect choppy trading activities as investors monitor sector- and company-specific developments and movement in fixed income yields.
Money Market and Fixed Income
The OVN rate advanced by 2bps to 24.9% amid inflow from FGN bond coupon payments (NGN261.38 billion) and outflows for the monthly FGN bond primary market auction (NGN313.77 billion). Overall, system liquidity remained healthy, with average net long position settling at NGN2.05 trillion (Previous: NGN1.88 trillion).
Next week, we expect inflows of NGN1.44 trillion from OMO maturities. However, given this significant boost in system liquidity, we expect mop-up activities from the CBN, causing the OVN rate to remain at current levels.
Treasury Bills
Bearish sentiments prevailed in the Treasury Bills secondary market as both local and offshore investors offloaded positions, with large offers particularly seen in the OMO segment. Thus, the average yield across all instruments increased by 24bps w/w to 19.6%. By segment, NTB yields increased by 2bps to 17.5%, while OMO yields advanced by 50bps to 22.1%.
We expect the significant inflows coming into the system next week to drive demand for bills, likely resulting in a moderation in yields. Also, the DMO is scheduled to conduct an NTB PMA next Wednesday (November 5) with NGN650.00 worth of bills on offer.
Bonds
Activities in the FGN bond secondary market reflected mixed sentiment, driven by month-end portfolio rebalancing and selloffs by investors in anticipation of the primary market auction. Accordingly, the average yield advanced by 2bps w/w to 15.9%.
Across the curve, the average yield increased at the short (+2bps) and mid (+12bps) segments following selloffs of the JAN-2026 (+37bps) and JUN-2033 (+42bps) bonds, respectively, while it closed flat at the long end. At Monday’s auction, the DMO reopened the AUG-2030 and JUN-2032 bonds with a total offer size amounting to NGN260.00 billion.
Despite robust subscription (NGN1.06 trillion; bid-to-offer: 4.1x), the DMO allotted NGN313.79 billion (bid-to-cover: 3.4x), setting stop rates at 15.83% (Previously: 16.00%) and 15.85% (Previously: 16.20%), respectively.
Similarly, we expect the liquidity influx into the system next week to drive demand for bonds, causing yields to taper slightly.
Foreign Exchange
The naira appreciated this week by 1.9% w/w to NGN1,439.00/USD, driven by increased supply. Meanwhile, gross FX reserves increased for the sixteenth consecutive week, growing by USD204.50 million w/w to USD43.15 billion (October 22).
In the forwards market, the naira rates appreciated across the 1-month (+2.2% to NGN1,459.65/USD), 3-month (+2.3% to NGN1,507.40/USD), 6-month (+2.4% to NGN1,576.05/USD) and 1-year (+2.7% to NGN1,707.30/USD) contracts.
We maintain a positive outlook on the naira, supported by expectations of sustained FX liquidity. On the domestic front, rising non-oil exports and improving market confidence should underpin inflows, while externally, healthy FX reserves, a positive current account position, and a firmer global monetary easing are expected to reinforce foreign investor sentiment and stimulate additional FX market inflows.
Cordros
