UAE signs two new CEPA deals

The UAE has signed Comprehensive Economic Partnership Agreements (CEPA) with both the Philippines and Nigeria, on the sidelines of the Abu Dhabi Sustainability Week. The latest deals form part of the broader strategy of positioning the UAE as a global hub for trade and will contribute to the goal of increasing total non-oil trade to USD 1.1trn by 2031.

Headline US consumer price inflation remained steady, consistent with consensus expectations, at 2.7% y/y in December. Core inflation also remained unchanged at 2.6% y/y. On a monthly basis however, core CPI surprised on the downside, rising 0.2% in contrast to consensus expectations for a 0.3% m/m gain. Shelter costs increased in December, accounting for the largest portion of the monthly increase. Other notable price increases included groceries, airfares and recreation costs. In better news for the Fed, core goods inflation stagnated.

The outlook for global GDP has been revised higher in the World Bank’s latest World Economic Outlook. The organization now expects global growth of 2.6%, up from 2.4% in its June 2025 report, citing notable resilience in the face of trade disruptions. The outlook for the US economy in 2026 was revised upwards, to growth of 2.2% from 1.6% previously. Growth in the UAE is expected to reach 5% in 2026.

Today’s Economic Data and Events

• 17:30 US PPI (Nov): forecast 2.7% y/y
• 17:30 US retail sales (Nov): forecast 0.4% m/m

Fixed Income

• Moves in US Treasury yields were muted on Tuesday following the marginally better-than-expected core CPI print. The 10yr yield gained under 1bps to 4.1792%, while the 2yr yield fell very slightly to reach 3.5324%.
• There were widespread rises in European bond yields on the day, with the 10yr Gilt gaining 2.5bps to 4.397%.

FX

• The US dollar gained against a basket of major peer currencies on Tuesday, following the CPI print, with the spot index rising almost 0.3%. EURUSD fell 0.2% to 1.1642, while GBPUSD declined by 0.3% to 1.3422. The Yen came under continued pressure amidst a reported plan for a snap election, leaving USDJPY 0.6% higher at 159.14.
• In emerging economies, USDEGP was broadly unchanged at 47.15, while USDTRY rose by just under 0.1% to 43.1571.

Equities

• US equities fell on Tuesday. The S&P 500 declined by 0.2%, the Dow Jones fell 0.8% and the NASDAQ dropped by 0.1%.
• Moves in European markets were mixed. The Euro Stoxx 50 index rose 0.2%, the FTSE 100 was broadly unchanged, the DAX rose 0.06%, and the CAC 40 fell 0.1%.
• In local markets the DFM rose 0.8%, and the ADX gained 1.3%. The Tadawul rose 1.4%.

Commodities

• Oil prices saw further gains on Tuesday, as geo-political tensions continue to rise. Brent futures rose 1.6% to USD 65.47/b, while WTI rose 1.7% to USD 61.15/b.
• Gold fell back marginally from a record high, declining 0.24% to USD 4,586.52/troy oz while silver rose 2.2% to USD 86.95/troy oz.