The latest weekly release from the Federal Reserve shows total assets at about $6.61 trillion as of mid-February 2026, showing a balance sheet reduction from pandemic highs following normalisation throughout 2025 and early 2026.
Global liquidity still runs through the dollar, and Nigeria cannot ignore this. Higher U.S. yields make it difficult for emerging markets to attract short-term capital. They also strengthen the dollar, which feeds directly into imported inflation and complicates exchange rate management.
For an economy that depends heavily on oil exports priced in dollars, the relationship is more complex. Stronger oil prices help Nigeria’s external reserves, however, if global dollar liquidity gets tougher at the same time, those improvements can be offset by capital outflows or currency instability.
At the same time, global oil markets are pricing in supply risk. Brent crude has climbed to around $72–$73 per barrel, its highest in about seven months, as geopolitical stresses escalate in the Middle East.
Meanwhile, equity indices have shown intermittent volatility but are still resilient. The S&P 500 hovered close to the 6,900 area in late February.
Taken together, these developments show how markets are balancing monetary conditions, spending patterns, and energy risk in early 2026.
Liquidity: Tougher Than in the Past, But Not Restrictive
A balance sheet of roughly $6.61 trillion confirms that policy is no longer in emergency mode, but still large by longer‑term historical standards.
Interest rates are higher than a few years ago, and the Federal Reserve has been gradually reducing the amount of securities it holds. But that reduction has slowed, and the level of reserves in the system has not fallen far enough to scrape out market liquidity entirely.
Investors are still willing to take risks. Credit spreads have not blown out, and volatility measures like VIX have stayed below crisis levels. Even assets that trade with higher risk premia, such as cryptocurrencies, have seen renewed institutional interest recently.
This dynamic points to a market that seems comfortable with current monetary conditions, even if official policy rates are still restrictive. Expectations of future rate cuts are part of the reason, with markets usually pricing in expected easing well before central banks act.
A huge risk is if inflation proves stickier than expected, the monetary easing investors currently price in may be delayed or even reversed. That would raise yields further and tighten financial conditions more than most anticipate.
Technology Investment: Strong Now, But Not Broad‑Based
Corporate investment in technology infrastructure, especially for advanced computing and data processing, is still a major driver of market and sector performance.
A small group of large technology companies are at the centre of this trend. Their capital expenditure plans, particularly in areas tied to machine learning and cloud infrastructure, have supported earnings growth and aggregate market valuation.
The concentration of earnings in a handful of large firms has lifted headline equity indices. This creates a situation where market performance depends heavily on a narrow segment of the economy.
Outside those core technology firms, earnings growth has been more muted. That is of concern because when valuations are concentrated at the top, any disappointment from those leading firms can ripple quickly across markets.
There is also a link between technology investments and energy consumption. Large data centres require significant power. With tech capex increasing, so is demand for reliable energy supply, connecting the narrative directly to trends in energy markets.
Oil Prices: The Risk That Could Shift the Macro Balance
Globally, prices of oil have increased to levels not seen for months. Brent crude climbing into the low $70s per barrel shows supply risk priced into markets due to geopolitical tensions in the Gulf region.
Recent military action involving the United States and Israel has boosted concerns about supply disruption through the Strait of Hormuz, a critical artery for global oil flows. Markets responded, pushing prices higher on the expectation of risk rather than actual physical cuts to supply.
Reports have even suggested that if firm disruptions occur, Brent could rise towards $80 per barrel, although this is far from certain.
Higher oil prices feed into consumer and producer cost structures. Transport is expensive, fertiliser and agricultural input prices are high and that can keep inflation elevated even when core goods are subdued. Central banks, monitoring inflation closely, will respond to these challenges.
For oil‑exporting nations, stronger prices support foreign exchange revenues and fiscal positions. For oil importers, the opposite is true, energy costs can squeeze budgets and slow growth.
How These Forces Interact
These three forces, liquidity situations, concentrated technology investment, and expensive energy prices, are not independent.
- If prices of oil continue to increase and push inflation expectations higher, bond yields could increase too. Higher yields tighten monetary requirements even without changes in central bank policy.
- If tech investment slows or earnings disappoint, markets that rely on a narrow base of corporate profits could see more weakness.
- If financial situations get tougher unexpectedly, credit spreads could widen, reducing risk appetite.
Market stability today depends on these forces staying in relative balance. A shift in one can ensure movements in the others.
What to Watch This Week
As we begin March, these indicators are essential:
- Official inflation data from major economies
- Treasury auction results and changes in bond yields
- Weekly oil inventory reports and OPEC+ announcements
- Corporate earnings guidance on capex spending
- Credit market stress indicators such as high‑yield spreads
Small changes in these indicators can influence market expectations.
Liquidity is tougher than in the years following the pandemic, but it has not withdrawn. Technology investment is supporting markets, albeit in a concentrated manner. Oil prices are growing as geopolitical risk premiums increase.
None of these forces alone ends a bull market or derails growth projections. But together, they influence the conditions that markets are currently pricing.
The important focus this Monday is not whether markets will rise or fall, but how these three forces, liquidity, AI and Oil, interact going forward.
