Saudi Arabia to invest USD 600bn in the US

Saudi Arabia has committed to investing USD 600bn in the US economy, including investments into data centres, digital infrastructure, energy, healthcare and aviation. The US will also provide USD 142bn worth of defence material to Sauid Arabia. The commitment follows the visit of US President Donald Trump to Saudi Arabia as part of his tour of the GCC where he will also visit the UAE and Qatar. The statement issued from the White House did not give a timeline for the investments from Saudi Arabia though previous discussions earlier this year suggested they would be spent over the next four years.

Saudi Arabia has also established a new AI firm, Humain, which will be owned by PIF. According to PIF, Humain will invest in data centres and AI infrastructure, including development of an Arabic language LLM.

Inflation in the US rose by 0.2% m/m in April and 2.3% y/y, slightly slower than a month earlier and short of market expectations. Headline inflation was moderated thanks to a steep fall in the price of eggs, helping to bring overall food price inflation lower, while core CPI rose by just 0.2% m/m and 2.8% annually. The April print does include a period during which the US imposed substantial tariffs on many of its key trading partners, including China, but firms had likely held steady on price changes until greater clarity emerged on what level of tariffs would be imposed. Market expectations for the June FOMC continue to erode with just an 8% probability of a 25bps cut.

Salik reported a 9% increase in registered vehicles for the first quarter of 2025 and estimated a 35% increase in the total number of trips compared with the same period last year.

Inflation eased in India to 3.2% y/y in April, down from 3.3% a month earlier. Food prices rose by just 1.8% y/y thanks to a near 11% decline in vegetable prices. Energy costs were higher by almost 3% y/y while the overall CPI index rose by its lowest level since 2019. The Reserve Bank of India began to cut rates in February and the April print below the central bank’s target range of 4% will give the RBI room for further cuts.

In the UK the unemployment rate for March ticked up marginally to 4.5% while employment in the three months ending March rose by 112k. Wage growth ticked marginally lower to 5.5% in March, down from 5.7% a month earlier.

In Germany the ZEW survey came in ahead of market expectations with a print of 25.2 for May, up from -14 a month earlier. Assessment of the current situation remains weak at -82, marginally weaker than a month earlier.

Today’s Economic Data and Events

10:00 GE CPI y/y Apr (F): forecast 2.1%

10:30 IN wholesale prices y/y Apr: forecast 1.5%

Fixed Income

US Treasuries showed limited moves in response to the US inflation data with the 2yr UST yield lower by 1bps at the 4% level while the 10yr was near unchanged at 4.465%.

Fitch affirmed their ‘AAA’ rating on the Islamic Development Bank with a stable outlook.

Warba Bank priced a USD 250m perp sukuk at 6.25%, tighter than initial guidance.

FX

After some sharp gains on Monday, the US dollar lost ground overnight with EURUSD up by 0.9% at 1.1185. GBPUSD gained nearly 1% to settle at 1.3306 while USDJPY pulled lower, benefitting the yen, at 147.48. Commodity currencies also moved stronger with AUDUSD leading the way with a near 1.6% gain to 0.6471 while NZDUSD added 1.4% to 0.5938. USDCAD dropped by 0.3% to 1.3936.

Equities

US equity markets closed mixed with the Dow Jones lower by 0.6% while the S&P 500 added 0.7% and the NASDAQ rallied 1.6%. In Europe, the Euro Stoxx 50 index rallied 0.4% while the FTSE closed near flat.

In local markets the DFM rallied 0.5% while the ADX was near flat. The Tadawul was higher by 0.4%.

Commodities

Oil markets bounced substantially overnight with Brent futures up by 2.6% at USD 66.63/b and WTI adding 2.8% to USD 63.67/b. Lingering optimism on the US – China trade truce is helping to turn around near-term sentiment on oil while US President Trump’s suggestions that the US will again seek to squeeze Iranian exports are also helping to create an impression of tighter supply.

The API reported a crude oil inventory build of 4.3m bbl last week offset by draws in gasoline and distillate stockpiles.