Daily Outlook - 14 August 2025

Austan Goolsbee, the president of the Chicago Fed, cautioned against the Federal Reserve “lurching” in to interest rate cuts too quickly and that the Fed would not process data “as rapidly as it comes in” when compared with financial markets. Goolsbee referred to the still high services inflation in the US as a problem for getting inflation close to the 2% target level. Scott Bessent, the US Treasury secretary, said that rates should be 150-175bps lower than where they are now.

Egypt has authorized the establishment of four new free zones that will produce for export only. Companies setting up in the free zone will have limited access to the Egyptian market and will pay market rates for electricity. Egypt already hosts nine free zones that are subject to special taxation and customs rules.

Salik reported a 50% rise in net income in Q2 on the back of strong operational performance and investment into new toll gates across the Dubai road network. Chargeable trips rose by 1.6% in Q2 to 160.4m while peak travel time trips increased by nearly 50% to almost 60m. Paired with strong numbers out from DEWA recently which reported growth in utility distribution, the Salik results serve as a strong proxy GDP number for performance in Dubai’s non-oil economy.

Today’s Economic Data and Events

10:00 UK GDP Q2: forecast 0.1% q/q

10:00 KSA CPI y/y July

10:30 IN wholesale prices July: forecast -0.5%

16:30 US PPI Jul y/y: forecast 2.5%

16:30 US initial jobless claims Aug 9: forecast 225k

Fixed Income

US Treasury markets continue to raise their hopes for a September rate cut from the Fed with yields lower overnight. The 2yr UST yield dropped almost 6bps to 3.6745% while the 10yr yield was lower by nearly the same amount to 4.2326%. Market pricing for September is now for marginally more than a 25bps cut.

There were strong gains across GCC bond markets overnight with the overall index measured by Bloomberg up 0.3%. Sovereigns and investment grade were a big part of the gains while Saudi and Qatari bonds were the major out-performers on a geographic basis.

FX

US dollar weakness remained the theme overnight with losses against all major peers. EURUSD added 0.3% to 1.1705 while USDJPY pulled lower by 0.3% to 147.38. GBPUSD was a relative outperformer with a gain of nearly 0.6% to 1.3576.

Commodity currencies also pulled higher against the US dollar with a rise in NZDUSD of 0.4% to 0.5977 while AUDUSD added 0.3% to 0.6546.

In emerging markets, Indian rupee strengthened against the dollar, closing at 87.4388, along with gains for the Egyptian pound. Turkish lira was moderately softer overnight.

Equities

Equity markets continue to respond to hopes that the Fed will cut rates with all major US indices higher overnight. The Dow Jones added more than 1% while the S&P 500 gained 0.3% and the NASDAQ was higher by 0.1%. European markets were also stronger with a gain of nearly 1% in the Euro Stoxx index while the FTSE was about 0.2% higher.

Local markets remained soft. The DFM index fell 0.4% while the ADX was lower by 0.2%. The Tadawul closed near flat.

Commodities

Oil prices extended losses for a second day with a drop of 0.7% in Brent futures to USD 65.63/b while WTI fell by 0.8% to USD 62.65/b. Commercial crude stocks in the US rose by more than 3m bbl last week while draws in gasoline and distillates weren’t enough to offset an overall rise in petroleum inventories. Oil production ticked higher to 13.3m b/d.

The IEA projected a surplus of nearly 3m b/d for 2026 based on its most recent monthly oil market report thanks to a substantial deceleration in oil demand growth. The IEA expects demand of just 700k b/d in 2026, about half of what OPEC is projecting.