Treasury Bills, Bond Yields To Dip As N3trn Hits Financial System – FMDA

Yields on Treasury bills and Federal Government bonds are expected to decline further as about N3 trillion in liquidity flows into the financial system this week, the Financial Markets Dealers Association (FMDA) has projected.

According to FMDA’s latest market report, the inflow, estimated at N3.03 trillion, is largely driven by maturing Open Market Operations (OMO) securities worth about N2.25 trillion, which account for the bulk of the expected liquidity injection.

The association noted that system liquidity remained highly elevated in the previous week at N6.29 trillion, supported by large inflows from maturing securities, which helped sustain strong demand across fixed-income instruments.

“System liquidity remained elevated at N6.29 trillion, supported by sizeable inflows from maturing securities,” FMDA stated in its report.

Looking ahead, the association said, “An estimated N3.03 trillion is expected to flow into the system this week, largely driven by OMO maturities, which account for about 74 per cent of projected inflows.”

The expected liquidity surge is expected to further strengthen investor demand for fixed-income securities, particularly Treasury bills and Federal Government of Nigeria (FGN) bonds, thereby exerting downward pressure on yields.

In the bond market, average FGN bond yield eased slightly to 16.20 per cent from 16.25 per cent in the previous week, reflecting improved demand across most maturities and relatively stable trading conditions.

Similarly, Treasury bill yields declined on average to 17.45 per cent from 17.51 per cent. The 12-month tenor recorded the sharpest decline, falling by 41 basis points to close at 18.61 per cent.

FMDA said movements across the fixed income market showed a mixed but broadly downward trend, with stronger demand supporting price gains and yield compression in key instruments.

It noted that while global bond yields edged higher due to inflationary pressures and cautious monetary policy expectations, Nigeria’s long-term benchmark yields remained largely stable.

According to the association, the relative stability underscores sustained investor confidence in domestic fixed income assets despite global market volatility and shifting macroeconomic conditions.