GLOBAL ECONOMY
In the US, the April 2026 FOMC minutes released this week signaled a hawkish tilt, with most policymakers open to further tightening if inflation persists, while keeping rates unchanged at 3.50%–3.75%, though cuts remain conditional on clearer disinflation or labor market weakness. The labor market remains resilient, with initial jobless claims declining to 209,000 from 212,000, and improving hiring momentum from ADP data. Business activity continues to expand moderately (Composite Purchasing Managers Index (PMI) stable at 51.70), driven by strong Manufacturing PMI which increased to 55.30 from 54.50 but offset by softer Services PMI, which declined to 50.90 from 51 points, amid weak demand and declining exports.
UK labour market conditions showed mixed signals, with the Unemployment rate rising slightly to 5% (vs 4.90%), though employment remained strong with gains of 148,000 (vs 107,000 expected), suggesting resilience despite pressures from the US–Iran conflict. Meanwhile, inflation cooled sharply to 2.80% (vs 3.30%), driven by lower housing and energy-related costs following the price cap, with core inflation also easing to 2.50% (vs 3.10%, lowest since 2021) due to a slowdown in services prices (3.20% vs 4.50%). However, underlying price pressures remain, as goods inflation firmed (2.40% vs 2.10%) and monthly core inflation accelerated (0.70% vs 0.60%). On the producer side, cost pressures re-emerged, with core Producer Price Index (PPI) rising 0.70% (vs 0.20%) month on month (MoM) and 2.40% (vs 2%) year on year (YoY), while annual PPI surged to 7.70% YoY (vs 5.30%) and 2.40% MoM (vs 4.30%), reflecting persistent upstream inflation risks that could feed into consumer prices despite recent headline disinflation.
The Eurozone’s trade surplus narrowed sharply to €7.82billion (vs €11.12billion) in March 2026 as exports fell 5.50% to €265.26billion, dragged by declines in chemicals (-31.09%), machinery and vehicles (-2%), and food (-1.30%), with shipments to the US plunging 38.80% amid post-tariff normalization. Meanwhile, imports rose 4.40% to €257.44billion, driven by higher energy-related purchases, with fuel and lubricants up 8.30% and crude materials 5.80%, reflecting elevated costs linked to Middle East tensions, shrinking the Q1 surplus to €16.60billion (vs €55.40billion). On inflation, headline CPI was steady at 3%, above the ECB’s target, supported by a sharp rise in energy prices (10.80%), while core inflation eased slightly to 2.20% (vs 2.30%).
China’s labour market showed modest improvement, with the surveyed urban unemployment rate easing to 5.20% (vs 5.40%), below expectations, alongside declines across key segments. However, economic momentum weakened, as industrial production growth slowed to 4.10% YoY (vs 5.70%, and below 5.90% expected), with moderation in both manufacturing (4% vs 6%) and mining (3.80% vs 5.70%). Against this backdrop, the People Bank of China (PBoC) held policy rates unchanged for a 12th straight month, keeping the 1-year and 5-year LPR at 3% and 3.5%, respectively, as authorities balance slowing growth (evident in weaker industrial output and retail sales) with rising price pressures linked to energy costs and geopolitical disruptions.
Next week, we expect news regarding the war in the Middle East and progress in restoring energy exports from the region to continue to set the pace for sentiments in global economies
GLOBAL MARKETS
US stocks advanced on Friday, lifted by signs of progress in Middle East peace talks and a strong corporate earnings season.. Compared to last week, the Nasdaq, S&P 500 and Dow Jones indices increased by 1.22%, 0.88% and 2.13% to 29,481.64, 7,473.47 and 50,579.70, respectively.
European markets closed high, supported by a degree of stabilization in global markets, while investors assessed the likelihood of a US-Iran agreement. Compared to last week, the FTSE 100, German DAX and CAC 40 indices increased by 2.66%, 3.92% and 2.05% to 10,466.26, 24,888.56 and 8,115.75, respectively.
Asian stocks closed mixed following market doubts as Chinese authorities have reportedly been requesting additional disclosures from listed companies and exchange-traded funds regarding their exposure to and strategies around AI. Compared to last week, the Hang Seng decreased by -1.3% to 25,606.03 while the Topix index increased by 0.74% to 3,892.46.
Next week, we expect mixed trading as strong earnings from the world’s largest companies clash with the inflationary impact of the war.
DOMESTIC ECONOMY
CBN Holds Rates at 26.50% as Inflation Risks Anchor Tight Policy Stance and Naira Stability
The Central Bank of Nigeria (CBN) retained all key policy parameters at its 305th Monetary Policy Committee (MPC) meeting on May 19–20, 2026, maintaining the Monetary Policy Rate (MPR) at 26.50%, Cash Reserve Ratio (CRR) at 45.00% for commercial banks, and Standing Facilities Corridor at +50.00/-450.00 basis points, signalling a deliberate “wait-and-see” approach focused on macroeconomic stability. The decision comes amid a modest rebound in inflation to 15.69% in April, driven by energy and food cost pressures, despite prior disinflation from over 30%, with the MPC prioritising exchange rate stability and sustained foreign exchange (FX) liquidity over growth acceleration. Tight liquidity conditions reinforced by the high CRR restricting lendable funds and elevated borrowing costs continue to dampen credit expansion, suppress import demand, and support the Naira, albeit at the expense of business expansion and consumer borrowing.
Oil Price Surge Drives Indigenous Producers’ Output Push as Nigeria Targets +300,000.00 bpd Growth
Nigerian indigenous oil producers are fast-tracking drilling and expansion projects as elevated crude prices driven by Middle East tensions and supply disruptions at the Strait of Hormuz (which handles ~20.00% of global oil and Liquefied Natural Gas (LNG) flows) boost revenues and investment capacity, with industry estimates indicating potential output gains of 200,000–300,000 barrels per day (bpd) before end-2026. Key operators are scaling aggressively, with Oando Energy Resources targeting a 30.00% increase to 42,500 bpd and Petralon Energy projecting a 56.00% rise to 7,500 bpd, while joint ventures like Pan Ocean Oil Corporation and Newcross Companies (currently ~48,000 bpd) have resumed idle wells. Nigeria’s total production has already rebounded to 1.66 million bpd in April 2026, supported by reforms from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and asset transfers from International Oil Companies (IOCs) to local firms. Globally, crude markets remain tight, with Bonny Light trading at ~$117 per barrel and Brent at $111.28 per barrel, sustaining strong fiscal inflows and investor interest, including Middle East capital. Domestically, the Dangote Petroleum Refinery is reshaping supply dynamics absorbing about 66.67% of its crude feedstock locally while petrol imports plunged from 25 million litres per day in January to 3.70 million litres per day by April, strengthening external balances and supporting a sovereign rating upgrade.
Nigeria’s Tax Revenue Hits ₦7.44trillion in Q1 2026 but Misses Target by ₦2.24trillion Amid Weak Non-Oil Performance
Nigeria’s tax revenue rose 23.20% year-on-year to ₦7.44trillion in the first quarter of 2026 but fell short of the ₦9.68trillion target by ₦2.24trillion, translating to a performance rate of 76.87%, a sharp reversal from Q1 2025 when the Federal Inland Revenue Service (FIRS) exceeded its target with 103.74% performance. Data from the Nigeria Revenue Service (NRS) shows the shortfall was driven largely by weak Companies Income Tax (CIT), Capital Gains Tax (CGT), and Stamp Duties collections at ₦3.75trillion versus ₦5.05trillion target (74.25%), alongside petroleum royalties of ₦1.12trillion, significantly below the ₦2.03trillion target (55.10%). In contrast, Petroleum Profits Tax (PPT) and Hydrocarbon Tax (HCT) outperformed at ₦1.62trillion, exceeding expectations by ₦318.23billion (124.42%), while Value Added Tax (VAT) remained relatively resilient at ₦2.42trillion (97.04% of target). Monthly data showed March collections at ₦2.31trillion, below the ₦3.23trillion target (71.64%) but up 5.51% from February, reflecting modest recovery. Despite reform-driven improvements and ambitious 2026 revenue projections of ₦40.70trillion, persistent gaps in non-oil tax performance, declining consumption affecting VAT, and structural inefficiencies continue to weigh on fiscal outcomes, even as new Tax Identification (Tax ID) reforms aim to improve compliance, transparency, and revenue mobilisation.
FAAC Gains Full PSC Oil Revenues as Tinubu’s Order Ends ₦263.12billion Deductions, Boosting Fiscal Transparency
The Federation Account Allocation Committee (FAAC) has begun receiving 100.00% of Nigeria’s Production Sharing Contract (PSC) oil revenues following full implementation of President Bola Ahmed Tinubu’s Executive Order 9 of 2026, marking a major shift from the prior Petroleum Industry Act (PIA) structure that allowed significant deductions before revenue distribution. Under the previous framework, only ₦175.42 billion (40.00%) of ₦438.54 billion PSC profits in Q1 2025 was remitted, with ₦131.56 billion each allocated to Nigerian National Petroleum Company Limited (NNPCL) management fees and frontier exploration—effectively reducing distributable revenue by ₦263.12 billion. The new directive eliminates these deductions, mandates full remittance of oil and gas proceeds, and suspends related payments such as gas flare penalties to sector funds, significantly boosting revenues available to federal, state, and local governments.
Next week, we await the release of the Purchasing Managers Index for May to gauge the Manufacturing strength of the economy.
EUROBOND MARKET
Nigeria’s sovereign Eurobond market closed weaker during the week, with average yields edging up by 1 basis point to 6.95%, reflecting subdued demand and persistent bearish sentiment across the curve. The uptick in yields signals reduced investor appetite for dollar-denominated sovereign debt, as participants trimmed exposure amid soft market conditions and cautious positioning. This performance underscores lingering concerns around global uncertainties and evolving United States (US) interest rate expectations, which continue to influence external debt markets.
We expect sentiment to remain mixed in the near term.
ALTERNATIVE ASSETS
GOLD
Gold ended the week lower and volatile, closing around $4,514.45–$4,516.75/oz (c. -3.50% to -4% w/w) as rising US Treasury yields and a firmer dollar continued to weigh on bullion, reflecting a sustained shift toward a “higher-for-longer” Fed outlook and elevated real yields that remain the dominant headwind for non-yielding assets despite intermittent geopolitical support. Overall, gold remains in a corrective phase within a broader structural uptrend, with near-term price action pointing to consolidation with a mild downside bias as financial conditions tighten.
OIL
Oil prices ended the week elevated but volatile, with Brent closing around $103.50–$103.94/bbl and WTI near $96.50–$97.00/bbl, as markets reacted to rapidly shifting headlines around US–Iran negotiations and the evolving outlook for supply disruptions through the Strait of Hormuz. Intraday swings remained pronounced, with Brent trading in a ~$101–$106 range, highlighting the persistence of geopolitical risk premia even as partial diplomatic progress introduced downside pressure late in the week.
ETF
ETF flows continued to reflect defensive and income-focused positioning, with fixed income products attracting sustained inflows supported by broader industry data showing ~$25.06billion weekly inflows into bond funds and ~$31.50billion monthly allocations into fixed income ETFs, underscoring persistent demand for yield and duration amid macro uncertainty. In contrast, commodity ETFs recorded modest net outflows of roughly -$0.90billion, as investors engaged in profit-taking following elevated energy prices and increased volatility.
Gold should stay range-bound with a slight downside bias due to firm yields and a strong dollar, though risks may offer support. Oil will remain headline-driven, with Brent likely drifting within a soft range amid demand concerns. ETF flows should favour fixed income, while commodity positioning stays tactical and cautious.
DOMESTIC MARKETS
Nigeria Adopts T+1 Settlement Cycle from June 2026 to Boost Liquidity and Cut Market Risk
The Securities and Exchange Commission (SEC) will implement a T+1 (Trade Date Plus One Day) settlement cycle for equities and commodities transactions effective June 1, 2026, replacing the existing T+2 framework and marking a major step in capital market modernisation. Under the new regime, all trades will settle within one business day, with a transition window where transactions executed on May 29 and June 1 will both settle on June 2, 2026. The reform reduces counterparty risk exposure by 50% by shortening the settlement period, enhances capital efficiency by freeing up funds and securities one day earlier, and aligns Nigeria with global standards already adopted by markets such as the United States.
The shift also follows a rapid transition cycle from T+3 to T+1 in under 7 months, signalling regulatory urgency to improve market liquidity and attract foreign institutional investors. While retail investors benefit from faster access to sale proceeds, brokers, custodians, and institutional players face increased pressure to upgrade systems and processes, as failure to meet operational readiness by the implementation date could result in settlement defaults and regulatory sanctions.
Treasury Bills Auction Oversubscribed by ₦179.33billion as Demand Hits 3.06x on One-Year Paper
The latest Treasury Bills (TB) auction recorded strong investor demand, particularly for the one-year instrument, with total subscriptions reaching ₦1.99trillion, representing a 3.06x oversubscription of the offer. The bid-to-cover ratio stood at 2.40x, while total allotment increased to ₦829.33billion, exceeding the initial offer and resulting in an oversubscription of ₦179.33billion, higher than the previous auction allotment of ₦731.75billion. Despite robust demand, stop rates remained largely unchanged across maturities, indicating stable pricing conditions, sustained liquidity, and continued investor appetite without significant yield repricing.
FGN Bond Auction Sees Weak Demand with Sub-1.00x Cover Despite ₦14.51bn Oversubscription
The Federal Government of Nigeria (FGN) bond auction held on May 18, 2026 recording a moderate-to-weak demand, with total subscriptions of ₦516.17billion representing 0.86x of the offer and a bid-to-cover ratio of 0.84x. Despite the soft demand, the Debt Management Office (DMO) allotted ₦614.51billion, resulting in a marginal oversubscription of ₦14.51billion. Yields increased across key maturities, as the FGN 2035 and FGN 2037 bonds rose by 41 basis points and 104 basis points to 17.00% and 17.04% respectively, indicating mild upward repricing amid cautious investor sentiment and relatively weak participation.
MONEY MARKET AND FIXED INCOME
Liquidity in the banking system remained surplus throughout the week, opening the week at a credit of ₦3.56trillion, a decline of ₦2.03billion from the previous week’s close, driven by net OMO settlement, liquidity increased on Tuesday by ₦166.89billion further increasing by ₦2.48trillion on Wednesday to ₦6.21trillion driven by Tuesday’s OMO maturity and coupon Payment into the system, declining slightly on Thursday by ₦316.88billion due to FGN Bod Auction settlement on Wednesday. Friday witnessed a decline of ₦3.11trillion to ₦2.78trillion owing to Thursday net OMO and Treasury Bills Settlement. Consequently, the Overnight Financing Rate (NOFR) remained unchanged at 22.00%.
Next week, we expect calm trading as financial markets anticipated the hold decision, and expect traders to favour short-tenored fixed income instruments over duration-sensitive assets.
EQUITIES MARKET
The Nigerian equities market closed the week on a negative note as the NGX All-Share Index and Market Capitalization decreased by 0.25% and 0.23% to close the week at 249,712.37 and ₦160.08trillion respectively compared to 250,330.92 and ₦160.44trillion last week.
A total turnover of 3.88 billion shares worth ₦161.76billion in 334,745 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 7.77 billion shares valued at ₦3374.04billion that exchanged hands last week in 402,945 deals.
On a sectoral basis, most sectors closed positive, with the Banking and oil and Gas indices rising by 1.11% and 0.07% while the Consumer Goods, Industrial Goods and Insurance indices fell by -0.84%, -1.24% and -1.77%.
Notable gainers this week were Associated Bus Company PLC and Academy Press PLC while Trans-Nationwide Express PLC and Sovereign Trust Insurance PLC topped the losers list.
Next week, we expect cautious trading and sectoral rotation as investors reassess earnings resilience under a high-interest rate environment.
CURRENCY
| (₦/$) | 22/05/2026 | 15/05/2026 | W-O-W% |
| NAFEM | 1,375.46 | 1,371.04 | 0.32% |
| Parallel | 1,400.00 | 1,395.00 | 0.36% |
Top Gainers
| TICKER | OPEN | CLOSE | CHANGE | % |
| ABCTRANS | 6.27 | 9.08 | 2.81 | 44.82% |
| ACADEMY | 7.05 | 9.15 | 2.10 | 29.79% |
| UPL | 5.00 | 6.40 | 1.40 | 28.00% |
| INTENEGINS | 2.79 | 3.41 | 0.62 | 22.22% |
| LEARNAFRCA | 10.85 | 12.90 | 2.05 | 18.89% |
Top Losers
| TICKER | OPEN | CLOSE | CHANGE | % |
| SOVRENINS | 2.94 | 2.28 | -0.66 | -22.45% |
| TRANSEXPR | 7.06 | 5.72 | -1.34 | -18.98% |
| CAP | 233.70 | 199.00 | -34.70 | -14.85% |
| BERGER | 168.95 | 147.60 | -21.35 | -12.64% |
| RTBRISCOE | 15.83 | 14.06 | -1.77 | -11.18% |
DISCLAIMER
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