Global Economy
According to the Bureau of Labour Statistics (BLS), US headline inflation slowed to +2.4% y/y in January, coming in below market expectations (+2.5%). The outturn reflected favourable base effect, and moderation in energy and food prices. Specifically, energy prices fell (-0.1% y/y vs December: +2.3% y/y), marking its first decline since July 2025, driven by softer gasoline and oil prices. At the same time, food inflation moderated to +2.9% y/y (December: +3.1% y/y), reflecting lower prices for both food at home (+2.1% y/y vs December: +2.4% y/y) and food away from home (+4.0% y/y vs December: +4.1% y/y).
Similarly, core inflation eased to +2.5% y/y – its lowest level since March 2021 – as rental inflation, recreation and household furnishing prices moderated. On a month-on-month basis, headline inflation edged up to +0.2% m/m (December: +0.3% m/m). While headline inflation has eased, underlying price pressures are likely to remain modestly elevated in the near term. That said, the disinflationary trajectory remains intact, supported by softer goods prices, easing supply-side constraints, and a gradual cooling in labour market conditions, albeit progressing at a measured and uneven pace.
According to the Office for National Statistics (ONS), the United Kingdom’s real GDP grew by 0.1% q/q in Q4-25 (Q3-25: +0.1% q/q), undershooting market expectations (+0.2% q/q). Growth in the quarter was slightly subdued, amid declining business investment and weak consumer spending, which resulted in limited economic momentum entering 2026. More specifically, the weaker momentum was driven by slower gains in household consumption (+0.20% q/q vs Q3-25: +0.40% q/q), higher import (+0.80% q/q vs Q3-25: 0.50% q/q) relative to exports (-0.60% q/q vs Q3-25: +0.20% q/q) and a sharp decline in gross fixed capital formation (-0.10% q/q vs Q3-25: +1.10% q/q).
Conversely, government expenditure improved (+0.40% q/q vs Q3-25: 0.30% q/q), supported by higher allocations to health, public administration, defence, and social care. On a year-on-year basis, economic expansion slowed to 1.0% y/y in Q4-25 (Q3-25: +1.2% y/y), pressured by reduced industrial output, softer external demand, and cautious investment activity amid the lingering impact of US tariffs. Looking ahead to the first quarter, we expect growth to remain modest in the near term, as soft household demand, weak investment, and sluggish hiring, driven by rising minimum wages and national minimum pension contributions, continue to weigh on activity. Accordingly, the IMF forecasts the UK economy to grow by 1.3% y/y in 2026E (2025FY: +1.3% y/y).
Global Market
Global equities traded mixed over the week, as investors weighed uneven macroeconomic signals across major economies alongside lingering concerns around AI valuation and capex spend in the Tech/AI complex. At the time of writing, US equities (DJIA: -1.3%; S&P 500: -1.4%) were tracking lower on the week, pressured by continued unease over big tech valuations and spending plans, with sentiment further softened by weaker-than-expected retail sales that outweighed a firmer January jobs print. In Europe (STOXX Europe: +0.2%; FTSE 100: +0.3%), equities were modestly higher, supported by strength in banks, industrials and select tech names, aided by upbeat corporate updates and a relatively supportive macro backdrop.
Across Asia, Japanese equities (Nikkei 225: +5.0%) outperformed, buoyed by improved risk appetite following the Liberal Democratic Party’s snap election victory, which reinforced expectations for a looser fiscal stance and potential tax relief. Chinese equities (SSE: +0.4%) were slightly higher, with pockets of strength in media/tech on optimism around ByteDance’s latest AI video-generation model, which offset persistent deflationary pressures. Emerging and Frontier markets (MSCI EM: +4.3%; MSCI FM: +4.0%) advanced, reflecting gains in China (+0.4%) and Vietnam (+3.4%), respectively.
Domestic Economy
Based on FMDQ data, total inflows into the Nigerian Foreign Exchange Market (NFEM) declined by 10.8% m/m to USD3.00 billion in January (December: USD3.37 billion). The performance was primarily due to a decline in inflows from local sources (40.4% of total inflows). Specifically, inflows from local sources dipped by 51.9% m/m to USD1.22 billion in January (December: USD2.52 billion) driven by decline in inflows from the CBN (-95.1% m/m), individuals (-59.1% m/m), exporters/importers (-28.5% m/m) and non-bank corporates (-28.3% m/m) segments. At the same time, inflows from foreign sources increased significantly by 111.5% m/m to USD1.79 billion (December: USD847.40 million), due to higher accretions from the FPI (+135.1% m/m) and other corporate (+74.8% m/m) segments, which more than offsets the decline in inflows from the FDI (-40.0% m/m) segment. Looking ahead, we expect inflows from both domestic and foreign sources to remain robust, supported by sustained market confidence and still attractive carry trade opportunities.
According to the data obtained from the National Communications Commission (NCC), the total number of active telephony subscribers increased by 1.2% m/m to 179.64 million in December (November: 177.43 million). The improvement reflects a gradual recovery in the subscriber base following the conclusion of the NIN-SIM linkage program. At the same time, the total number of internet subscribers increased by 2.3% m/m to 147.52 million (December: 144.15 million). However, on a yearly basis, the average telephony subscribers declined by 4.8% to 173.09 million (2024FY average: 181.76 million), while the average number of internet subscribers fell by 2.0% to 141.95 million (2024FY average: 144.81 million), primarily reflecting the disconnection of SIMs not linked to verifiable NINs.
By market share, MTN Nigeria remained the industry leader with 51.9% (93.06 million subscribers), followed by Airtel Nigeria at 33.9% (50.89 million subscribers). Globacom accounted for 12.4% (22.23 million subscribers), while T2 (formerly 9mobile) held the smallest share at 1.8% (3.23 million subscribers). Looking ahead, we expect a steady uptick in the subscriber base, particularly driven by the two dominant operators, MTN Nigeria and Airtel Nigeria. This growth is likely to be underpinned by more targeted subscriber acquisition and retention strategies, including focused SIM reactivation efforts, enhanced customer engagement, and improved distribution efficiency. While Nigeria’s favourable demographic backdrop remains supportive, we believe the primary drivers of subscriber growth will be the operators deliberate commercial and retention initiatives.
Capital Markets: Equities
The Nigerian equities market extended its rally for a second consecutive week, underpinned by bargain hunting in bellwethers including MTNN (+14.3%), DANGCEM (+6.8%), SEPLAT (+14.0%), NESTLE (+21.0%), WAPCO (+12.9%), GTCO (+11.7%) and ARADEL (+10.8%). Consequently, the All Share Index (ASI) rose by 6.0% w/w to 182,107.12 points, its strongest weekly performance since 26 January 2024, lifting the MTD and YTD returns to +10.1% and +17.0%, respectively. Market participation also improved with total trading volume and value increasing by 26.4% w/w and 49.6% w/w, respectively. Sectoral performance was broadly positive, with gains recorded across the Oil & Gas (+11.4%), Industrial Goods (+7.1%), Banking (+5.8%), Consumer Goods (+3.0%), and Insurance (+0.4%) sectors.
Next week, we expect market performance to be guided by key macroeconomic releases, including the January inflation print, which could influence interest rate expectations. Sentiments will also be influenced by a new batch of earnings releases and accompanying dividend payments which may drive repricing.
Money Market and Fixed Income
The OVN rate declined by 2bps to 22.8%, buoyed by inflows from OMO maturities (NGN993.00 billion). Consequently, average system liquidity settled higher, closing at an average net long position of NGN3.64 trillion (prior week: NGN2.03 trillion).
Barring any mop up activities next week, we expect inflows from OMO maturities (NGN1.87 trillion) to boost system liquidity, potentially weighing on the OVN rate.
Treasury Bills
The Treasury bills secondary market was bullish this week driven by the strong system liquidity. Accordingly, the average yield across all instruments declined by 34bps to 19.3%. Across segments, average NTB yields declined by 7bps to 17.6%, while average OMO yields declined sharply by 61bps to 21.2%.
Next week, we expect robust system liquidity to drive demand for bills, causing yields to decline. However, this could be undermined by the NTB auction scheduled to be held next Wednesday (February 18), where the anticipation of high supply could lead to selloffs in the secondary market.
Bonds
The FGN bond secondary market was volatile this week, driven by (1) demand from offshore investors, (2) profit taking activities from market participants, and (3) traders reopening short positions. Overall, average FGN bond yields decreased by 7bps to 16.1%. Across the curve, the average yield decreased at the short (-73bps) and mid (-35bps) segments, driven by demand for the FEB-2031(-94bps) and APR-2032 (-88bps) bonds, respectively, while it closed flat at the long end.
Over the medium to long term, FGN bond yields are expected to pare, driven by the expectations of a dovish policy tilt and ample system liquidity.
Foreign Exchange
The naira appreciated this week by 1.1% w/w to NGN1,360.00/USD as supply matched market demand. Also, the gross FX reserves increased this week by USD505.70 million w/w to USD47.53 billion (February 10). In the forwards market, the naira rates appreciated across the 1-month (+0.8% to NGN1,379.73/USD), 3-month (+1.2% to NGN1,416.53/USD), 6-month (+1.9% to NGN1,465.41/USD) and 1-year (+2.2% to NGN1,563.99/USD) contracts. Notably, the CBN released a circular, approving the weekly sale of USD150.00 thousand by authorized dealers to licensed BDCs.
We expect the naira to remain broadly stable in the near term, supported by a weaker dollar and a favourable external position characterised by a sustained current account surplus and strong foreign exchange reserves. In addition, continued investor confidence and elevated naira yields should sustain capital inflows, helping to anchor the exchange rate.
Cordros
