Global Economy
According to the US Bureau of Labor Statistics (BLS), consumer prices in the United States declined for the third consecutive month, decelerating by 10bps to 2.3% y/y in April (March: 2.4% y/y) — the lowest level since February 2021 (1.7% y/y). The moderation was primarily attributed to softer energy and food prices. Notably, energy inflation (-3.7% y/y vs March: -3.3% y/y) declined further, driven by deeper contractions in gasoline and fuel oil costs. Similarly, food inflation (+2.8% y/y vs March: 3.0% y/y) moderated, reflecting the slower increases in prices of food at home (+2.0% y/y vs March: 2.4% y/y), while food away from home (+3.9% y/y vs March: +3.8% y/y) rose marginally.
On a month-on-month basis, headline inflation rose by 0.2% in April (March: -0.1% m/m), mainly due to higher shelter costs. While softer consumer demand continues to support a deceleration of inflation, risks remain tilted to the upside. We believe the recent inflation print has not yet captured the full effect of new tariffs, which could pressure core inflation in the short term by raising input costs and consumer prices in tariff-sensitive sectors. Accordingly, we expect the US Fed to maintain the funds rate at the next monetary policy meeting, aligning with the CME FedWatch Tool’s 91.8% probability of a “HOLD” decision on June 18.
According to the Office for National Statistics (ONS), the United Kingdom’s real GDP expanded by 0.7% q/q in Q1-25 (Q4-24: +0.1% q/q), coming in above market expectations (+0.6% q/q). The stronger growth largely reflects a rebound in business investment, improved services output, and a mild recovery in household spending. Analysing the breakdown, we highlight that the expansion in gross fixed capital formation (+0.52% q/q vs Q4-24: -0.11% q/q) and private consumption (+0.12% q/q vs Q4-24: +0.08% q/q) more than offset the contraction in government expenditure (-0.11% q/q vs Q4-24: +0.11% q/q). On a year-on-year basis, however, GDP growth slowed to 1.3% in Q1-25 (Q4-24: +1.5% y/y), reflecting weaker net trade performance and the lagged effects of tighter financial conditions from previous monetary policy adjustments.
Looking ahead, we maintain a cautiously optimistic outlook for the UK economy in the short to medium term, supported by gradually improving consumer confidence and the potential for further monetary policy easing by the Bank of England. Nonetheless, the growth momentum is likely to remain impacted by rising gilt yields, softer household consumption amid sticky inflation, and the dampening impact of newly imposed US tariffs. In line with the preceding, the IMF projects UK real GDP growth to steady at 1.1% y/y in 2025 (2024E: +1.1% y/y), a downward revision from its earlier 1.6% y/y forecast, as global trade tensions and domestic price pressures weigh on the outlook.
Global Equities
The global equities market posted a broadly positive performance this week, buoyed by the temporary de-escalation of trade tensions between the United States and China, which eased fears of a prolonged trade conflict and potential recession. Accordingly, US equities (DJIA: +2.6%; S&P 500: +4.5%) were poised to end the week higher, after recording the highest weekly gain since April 11. The positive performance follows the US and China’s agreement to a 90-day tariff reduction, with the US cutting duties on Chinese imports from 145.0% to 30.0% and China reducing tariffs on US goods from 125.0% to 10.0%. Investor sentiment was further boosted by a softer-than-expected April inflation print, reinforcing hopes of imminent rate cuts.
Similarly, European equities (STOXX Europe 600: +2.3%; FTSE 100: +1.4%) were set to close the week higher, benefiting from the broader global rally and positive reactions to stronger-than-expected Q1-25 GDP growth in the UK. Asian equities (Nikkei 225: +0.7%; SSE: +0.8%) advanced, supported by the easing US-China trade tensions. Market participants also monitored US-Japan trade negotiations, with Tokyo targeting a potential agreement by June. Meanwhile, Emerging and Frontier market indices (MSCI EM: +3.1%; MSCI FM: +1.5%) closed higher, supported by gains in India (+3.5%) and Vietnam (+2.5%), respectively.
Nigeria: Domestic Economy
According to the National Bureau of Statistics (NBS), headline inflation pared by 52bps to 23.71% y/y in April (March: 24.23% y/y). Accordingly, food prices moderated by 53bps to 23.71% y/y (March: 24.24% y/y) underpinned a significant moderation in farm produce prices, partly reflecting the impact of the off-season harvest, while core inflation decelerated (105bps to 23.39% y/y) primarily due to lower utilities and transports costs. On a month-on-month basis, headline inflation slowed by 204bps to 1.86% (March: 3.90% m/m).
Looking ahead, consumer prices are expected to increase in the near term due to sustained pressure across both food and core components of the consumer basket. Specifically, the persistent global uncertainty continues to sustain pressure on the naira, which is likely to keep import costs elevated, thereby contributing to overall price increases. In addition, food supply is expected to be tight in the near term primarily due to seasonal planting patterns across Northern and Southern food-producing areas, likely reinforcing food price pressures.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s crude oil production (including condensates) rose by 5.0% m/m to 1.68 mb/d in April (March: 1.60 mb/d), after two consecutive months of decline. The increase primarily reflects the pickup in production in the Forcados (+38.1% m/m) and Qua Iboe (+22.2% m/m) terminals, after sharp declines in March, supported by improving investment by Seplat Energy and Renaissance Africa Energy who took operatorship of the terminals after acquisition.
Meanwhile, the Brass (-33.2% m/m), Odudu (-8.9% m/m), Bonny (-3.2% m/m), Agbami (-3.0% m/m), Escravos (-2.4% m/m) and Tulja – Okwuibome (-2.1% m/m) terminals recorded declines. Looking ahead, we expect the combination of improved security measures and a gradual increase in sector investments to sustain production above 2024 levels. However, pipeline security concerns continue to pose a downside risk to near-term output. Thus, we maintain our average crude oil production estimate (including condensate) at 1.68 mb/d in 2025E (FG target: 2.06 mb/d).
Capital Markets: Equities
The domestic equities market extended its positive momentum this week, marking the fourth consecutive week of gains as investors reacted to the April inflation report and global trade developments. Specifically, the All-Share Index (ASI) advanced by 0.9% w/w to 109,710.37 points, supported by strong performances from OANDO (+20.7%), TRANSCORP (+6.0%), TRANSCOHOT (+6.2%), NESTLE (+10.0%) and ACCESSCORP (+10.3%), pushing the month-to-date and year-to-date returns to +3.7% and +6.6%, respectively. Meanwhile, trading volume increased by 3.8% w/w, while trading value fell by 12.5% w/w. Generally, sector performances were positive, as the Consumer Goods (+4.1%), Insurance (+2.5%), Banking (+1.2%), Oil & Gas (+0.7%) and Industrial Goods (+0.1%) indices all closed higher.
Next week, market sentiment is likely to hinge on the CBN’s monetary policy decision, with cautious trading expected as investors assess the broader macroeconomic backdrop. However, we do not rule out sustained bargain-hunting, particularly in Consumer Goods stocks, as risk-on sentiment gradually reemerges amid easing global trade tensions.
Money Market And Fixed Income
The overnight (OVN) rate inched higher by 1bp w/w to 27.0%, driven by a weaker liquidity balance at the start of the week, undermining the inflows from FGN bond coupon payments (NGN220.00 billion) and net CRR credits (c. NGN 57.00 billion). Accordingly, the average system liquidity settled at a lower net long position of NGN230.04 billion (vs a net long position of NGN915.26 billion in the previous week).
Next week, the inflows from FGN bond coupon payments (NGN17.87 billion) and OMO maturities (NGN1.14 billion) will be insufficient to support system liquidity. As such, the OVN rate is likely to trend higher amid an expected net NTB overallotment.
Treasury Bills
Proceedings in the Treasury bills secondary market were mixed, underpinned by (1) local investors’ demand for NTBs and (2) offshore participants’ selloffs of OMO instruments following volatile oil prices. Consequently, the average yield across all instruments advanced by 23bps to 23.7%. Across the market segments, the average yield declined by 13bps to 20.8% in the NTB market, while it increased by 4bps to 26.9% in the OMO segment.
Looking ahead, we expect the subdued system liquidity to cause yields to rise in the secondary market. Also, the DMO is scheduled to conduct an NTB PMA next Wednesday (21 May) with NGN500.00 billion worth of maturing bills on offer.
Bonds
The FGN bond secondary market was quiet, albeit with a bullish undertone as market participants reinvested coupon proceeds. As a result, the average yield declined by 4bps to 19.0%. Across the benchmark curve, the average yield increased at the short (+1bp) end, driven by selloffs of the MAR-2027 (+9bps) bond, while it decreased across the mid (-12bps) and long (-5bps) segments following demand for the JUL-2034 (-27bps) and APR-2037 (-20bps) bonds.
Over the medium term, we expect a moderation in bond yields, influenced by two factors – (1) the anticipated dovish monetary policy stance and (2) demand and supply dynamics.
Foreign Exchange
The naira appreciated by 0.5% w/w to NGN1,603.00/USD, supported by (1) improved market sentiment following a 90-day tariff reprieve stemming from US-China trade negotiations, and (2) the CBN’s intervention of c. USD40.00 million during the week. Meanwhile, gross FX reserves increased for the third consecutive week, growing by USD174.34 million w/w to USD38.30 billion (14 May). In the forwards market, naira rates rose across the 1-month (+0.3% to NGN1,636.05/USD), 3-month (+0.4% to NGN1,700.59/USD), 6-month (+0.3% to NGN1,793.67/USD) and 1-year (+0.8% to NGN1,972.22/USD) contracts.
Although global pressures are easing following the moderation of trade tensions, persistent global uncertainty is likely to continue weighing on foreign investor sentiment and likely constraining capital inflows in the near term. Nonetheless, relatively robust FX reserves should strengthen the CBN’s capacity to manage excess naira volatility through sustained market interventions.
Cordros
