Global Macroeconomic Review
Global central banks leaned towards tightening in September as growth and inflation data stayed firm. The U.S. Fed raised rates by 25bps to 3.75%–4.00%, its first hike since 2023, after August payrolls rose by 162,000 and unemployment held at 4.1%. Headline inflation stayed at 3.4%, while core inflation eased to 2.4%. The ECB also raised rates by 25bps (deposit rate 2.50%) as Eurozone inflation hit a three-year high of 3.2%, and Japan raised its rate to 1.25%. In the UK, inflation rose to 3.1% and the BoE held at 3.75% in a 6–3 vote, warning that energy prices could force it to raise rates. China’s official PMIs stayed below 50, and India held at 5.25% as inflation rose to 4.82%. In Africa, South Africa raised its repo rate to 7.25%, while Angola cut to 14.75%. The U.S. 10-year yield climbed to 5.29% by month-end.
Domestic Macroeconomic Review
Nigeria’s headline inflation eased for a third straight month in August, falling to 15.39% y/y from 15.43% in July, its lowest level since March. Monthly inflation slowed to 0.71% from 1.57%. Core inflation fell to 13.0% from 14.97%, and food inflation eased to 19.57% from 20.31%, with monthly food inflation dropping to 1.02%. However, energy inflation rose to 4.69% and remains the main risk to further disinflation.
Market Update
Markets in September were driven by the CBN’s 350bps MPR cut to 23.00%, Nigeria’s FTSE Frontier Market reclassification, and rising global yields. The naira appreciated by 0.28% to ₦1,329.16/$ at the NFEM, while the parallel market gained 1.79% to ₦1,370/$, narrowing the gap to about ₦41/$ from ₦62/$. External reserves rose to an 18-year high of $54.86 billion. Average system liquidity rose to ₦4.70 trillion, though daily swings were large (from ₦2.03tn to ₦8.84tn). FGN bond yields fell by 91bps to an average of 15.80% after the rate cut, with the 10-year down 110bps to 16.01%. Sovereign Eurobond yields rose by 57bps to 7.56%, as higher U.S. yields caused a sell-off in the last week. Equities rallied, with the NGX All-Share Index up 2.87% to 251,211.67 points and market capitalization at ₦163.10 trillion, as investors expected foreign inflows from the FTSE reclassification and a shift from fixed income into stocks.
