Inflation in Egypt moderates in January

Egypt’s annual CPI inflation fell to 24.0% y/y in January, down only marginally from the 24.1% seen in December but still the slowest pace of price growth in more than two years. Prices were up 1.5% compared with 0.2% in November m/m as food prices increased by 1.8% m/m compared to a 1.5% fall in November, and this prevented a more marked slowdown in the annual headline measure. We still anticipate that the CBE will begin its rate-cutting cycle at its upcoming February 20 meeting as headline inflation should slow more sharply in the coming months, but this will likely be in the 200-300bps range rather than a more aggressive 300-400bps.

Industrial production in Saudi Arabia rose 1.3% m/m and 2.1% y/y in December according to data from the General Authority for Statistics (Gstat), compared with a 3.4% y/y expansion logged in November. Average y/y growth over 2024 was -2.2% as mining and quarrying was in negative territory through most of the year on the back of oil production curbs. With these curbs now passed through the base the drag from the sector in December was just 0.4% y/y. Manufacturing was up 6.3% y/y in December, while the sub-index of electricity, gas, steam, and air conditioning supply recorded a 1.9% y/y decrease. Gstat has also released its 2024 population estimate for Saudi Arabia, putting the total at 35.3mn in the middle of the year, representing y/y growth of 4.7%. Saudi citizens numbered 19.6mn, or around 56% of the total, while non-Saudi residents were around 15.7mn.

Industrial output in Turkey increased by 7% y/y in December, an acceleration on the 1.6% recorded a month earlier. All sub sectors of industry improved with manufacturing up by 6.8% y/y in December, compared with 1.1% a month earlier. Utility output rose by 11% y/y. Industrial output contracted y/y for several months in 2024 while producer price inflation has eased in line with moves in headline CPI. The unemployment rate in Turkey also ticker lower in December to 8.5% from 8.6% a month earlier.

Today’s Economic Data and Events

Nil

Fixed Income

• Treasury markets were relatively quiet in a day with limited economic data releases. There was a moderate upswing with yields on the 2yr UST lower by about 1bps while the 10yr closed near unchanged at 4.4968%. Markets will be watching Fed Chair Jerome Powell’s comments to Congress this week for more indication of whether the Fed will hold its rates unchanged for an extended period.
• ADCB is in the market for a USD benchmark 5yr Formosa bond priced at SOFR+105.

FX

• The US dollar pushed higher against peer currencies overnight as markets responded to the latest tariff announcements from US President Donald Trump. Commodity currencies, particularly CAD and NZD closed weaker as the newest tariffs target aluminium exports to the US. EURUSD was lower by 0.2% at 1.0307 while GBPUSD dipped 0.3% to 1.2368. USDJPY also pushed higher, up by 0.4% at 152.
• In emerging markets USDTRY edged higher by 0.1% to 36.0129 while USDINR rose by 0.1% to 87.4762.

Equities

• Benchmark equity markets closed higher overnight with the Dow Jones up 0.4%, the S&P 500 rising by 0.7% and the tech-heavy NASDAQ climbing by 1%. European markets were also positive with a 0.6% gain in the Euro Stoxx 50 while the FTSE rose by0 .8%.
• In local markets the DFM closed higher by 0.4% while the ADX gained 0.7%. Du reported net income for 2024 of AED 2.49bn, up 49% y/y, while its mobile user base expanded by 4% y/y in Q4. DEWA reported profit of AED 7.24hbn in 2024, down by 8.8% y/y while generating 59.1TWh, up 5.4% y/y.
• Etihad is reportedly considering a float of as much as 20% on the Abu Dhabi stock market as early as this month, according to press reports.

Commodities

• Oil prices had a strong start to the week with both Brent and WTI futures up 1.6% at USD 75.87/b and USD 72.32/b respectively. A drop in Russian flows for January helped to add to perceptions of market tightening all the while the threat of tariffs hangs in the back ground. A potential escalation of geopolitical tension could emerge again as US President Donald Trump has said that the ceasefire in Gaza should be ripped up if either side fails to hold to their terms.
• It was a positive day in metals markets with gold prices at new record levels. Gold closed at USD 2,908/troy oz overnight, up 1.7% and has pushed higher in early trade today. Across industrial metals aluminium, copper and iron ore all closed higher.