The final week of January 2026 was a study in global financial contrasts. While the US Federal Reserve held rates steady, political shocks in Japan sent the yen spinning, and across Africa, central banks charted independent courses through disinflation. In Nigeria, the ripple effects were clear: a surge of foreign buying in bonds hinted at shifting global capital flows. It was a week that highlighted how interconnected yet distinct the world’s economic stories remain.
Let’s break it all down.
Global Economy
US: The Fed Hits the Pause Button
After three consecutive cuts, the US Federal Reserve held its benchmark rate steady between 3.50% and 3.75%. The decision wasn’t unanimous. Two of the 12 voting members wanted to cut rates by another 25 basis points, but they were outvoted 10-2.
What changed? The Fed’s tone. Their policy statement was noticeably more upbeat in previous meetings, citing solid growth and a stabilizing unemployment rate, though inflation remains elevated.
Fed Chair Jerome Powell made a key comment that caught attention. He said interest rates are no longer “significantly restrictive.” Translation: rates aren’t choking the economy anymore. They’re closer to neutral, which means the Fed doesn’t feel the urgent need to keep cutting.
Powell also stuck to the Fed’s usual line about taking things one meeting at a time. No promises about what comes next. They’ll keep watching the data and adjust as needed.
Leadership Change on the Horizon
In other news, President Trump nominated Kevin Warsh to replace Powell when his term ends in May. Warsh is a former Fed governor who served during the 2008 financial crisis. The nomination still needs Senate confirmation, but it signals Trump wants someone he sees as more aligned with his economic priorities.
Japan: Yen Jitters and Tech Fatigue
Japanese stocks had a rough week. The Nikkei 225 fell 0.97%, and the TOPIX dropped 1.75%.
Two things weighed on the market. First, tech stocks came under pressure. Investors are starting to question whether all the money being poured into artificial intelligence will actually pay off. That skepticism hit valuations across the sector.
Second, the yen got stronger against the dollar. That’s bad news for Japanese exporters because a stronger currency makes their products more expensive overseas and cuts into their profits when they convert foreign earnings back to yen.
Currency Intervention Speculation
The yen didn’t just drift higher. It surged. The move came after Prime Minister Sanae Takaichi called a snap election and floated the idea of unfunded tax cuts. Markets got nervous about Japan’s fiscal situation.
Then came the intervention talk. Japanese officials didn’t confirm they were buying or selling yen, but they made their position crystal clear. Takaichi promised “decisive action” against what she called speculative and abnormal currency moves. Japan’s top currency diplomat emphasized close coordination with US counterparts.
All of this is happening ahead of the February 8 election. Polls suggest Takaichi’s Liberal Democratic Party might win enough seats to govern without needing a coalition partner, which would give her more freedom to push her economic agenda.
Sub-Saharan African Economies
Eurobond yields across major Sub-Saharan economies showed mixed movements week-on-week:
Ghana: Aggressive Rate Cuts Signal Confidence
The Bank of Ghana came out swinging at its first meeting of 2026. They cut the policy rate by 250 basis points to 15.5%. That’s the lowest borrowing cost in Ghana since February 2022.
This wasn’t a cautious quarter-point trim. The central bank is confident inflation is under control and wants to make borrowing cheaper to support growth.
The numbers back them up. Inflation fell to 5.4% in December, the lowest since July 2022. Even better, that’s the 12th consecutive month of declining inflation. It’s getting close to the central bank’s medium-term target of 8%.
Governor Johnson Asiama said economic growth is projected to remain strong in 2026. The central bank plans to continue monitoring the situation and will adjust policy as needed to ensure the gains from macroeconomic stability translate into sustainable growth. But for now, they’re clearly more worried about supporting the economy than fighting inflation.
Kenya: Inflation Stays Cool
Kenya’s inflation story is less dramatic but just as important. The annual inflation rate eased to 4.4% in January, down slightly from 4.5% in December and November. That’s a six-month low.
Some of the decline came from base effects (compared with high prices a year ago), but the trend is clear. Inflation has stayed below the central bank’s 5% midpoint since June 2024. That’s where policymakers prefer to keep it.
On a month-to-month basis, CPI rose 0.6% in January, at the same pace as December. Nothing alarming. This gives Kenya’s central bank plenty of room to keep interest rates where they are and focus on supporting economic activity rather than fighting price pressures.
Domestic Economy
Major Updates During the Week
- Oil Revenue Beats Expectations: Nigeria’s oil sector had a great year in 2025, bringing in an estimated ₦55.5 trillion from crude sales. A total of 530.41 million barrels were produced over the year at an average price of $72.08 per barrel.What makes this number interesting is that Nigeria’s output remained below its OPEC quota for most of the year. Production constraints from aging infrastructure, pipeline vandalism, and oil theft continued to limit the amount of crude the country could pump. Despite that, 2025 earnings still beat 2024 earnings.
- New Licensing Round Aims to Boost Production: In a bid to accelerate future production, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has opened 50 oil and gas blocks for bidding across five sedimentary basins in the 2025 licensing round. The new process is strictly merit-based and compliant with the Petroleum Industry Act. Signature bonuses have been reduced to $3 million to $7 million (down from higher levels in previous rounds) to attract investors who are technically competent and financially strong. The goal is to fast-track production from new fields.
Equity Market: Mild Profit-Taking Trims Gains
The Nigerian stock market closed slightly lower for the week. The NGX All-Share Index fell 0.08% to settle at 165,371.77 points. That trimmed year-to-date returns to 6.27%. Market capitalization eased to ₦106.15 trillion.
The decline was minimal, but it showed some investors taking chips off the table after the market’s strong start to the year. Losses were concentrated in a handful of stocks. NEIMETH, LIVINGTRUST, and MAYBAKER took sharp hits. Meanwhile, gains were clustered in OMATEK, UHOMREIT, MORISON, and SCOA.
Market breadth was mixed, suggesting sentiment wasn’t uniformly negative. Trading activity highlighted continued stock-specific positioning. Some counters stayed flat, while select mid-cap and small-cap names saw big moves.
On the sector front, four of the five major indexes closed higher. The insurance sector led the gains by 0.81% for the week. That positive performance cushioned the broader market softness and kept the overall decline minimal.
Fixed Income Market: Foreign Investors Drive Bond Rally
Nigeria’s bond market had an excellent week. The Debt Management Office kicked things off with its first bond auction of 2026. They successfully sold ₦1.67 trillion (including non-competitive bids) out of a total of ₦2.25 trillion in subscriptions. Demand was solid across three maturities.
Auction Stop Rates
- FGN-2031: 17.62%
- FGN-2034: 17.50%
- FGN-2035: 17.52%
Then the real action started in the secondary market. Foreign portfolio investors came in strong, buying Nigerian bonds and pushing yields sharply lower. When yields fall, bond prices rise, and existing bondholders make gains.
- Treasury bill yields dropped to 18.22% from 18.57% the previous week. That’s a 35-basis-point drop.
- Bond yields fell by an average of 43 basis points week-on-week to 16.48%.
- Eurobonds saw mild movement, with average yield edging up just 2 basis points to 7.07%.
The rally was driven almost entirely by foreign demand. International investors looking for yield in emerging markets saw Nigerian bonds as attractive at these levels and bought aggressively. Expectations are that this bullish sentiment will continue next week, supported by sustained demand across fixed-income instruments.
The Bottom Line
As we move into February, the threads of policy, politics, and market sentiment remain tightly woven. The Fed’s steady hand provides a backdrop, but political shifts in Japan and sustained disinflation in Africa remind us that local stories drive global narratives. Nigeria’s bond rally, fueled by foreign interest, highlights the search for yield in a complex landscape.
The story in 2026 is being written in real-time, one central bank decision and one currency swing at a time.
