US and Qatar agree on USD 243.5bn in economic deals

The US and Qatar have agreed to USD 243.5bn in economic deals, according to a statement from the White House. Qatar will buy nearly USD 100bn in aircraft and engines from Boeing and GE Aerospace while the agreement also covers some existing projects that US engineering firms have to develop Qatar’s energy industry. Qatar has also agreed to buy USD 3bn in defence material from the US and to share the cost of maintaining and upgrading the Al Udeied Air Base, the largest US military base in the region.

US President Donald Trump will visit the UAE today for the final portion of his trip to the GCC where more economic partnerships are likely to be announced, covering sectors such as energy investments in the US and AI technology. Earlier this year the UAE said it would invest up to USD 1.4trn in the US over a period of 10 years.

Mary Daly, president of the San Francisco Federal Reserve, said that the US economy had “solid growth, solid labor market and declining inflation” and that monetary policy was in “a good position” to respond to the effect of the Trump administration’s policies. Philip Jefferson, vice chair of the Fed, said that the tariffs imposed by the government are “likely to interrupt progress on disinflation” and that the “current stance of monetary policy is well positioned.”

The financial services regulators in Abu Dhabi and Hong Kong have signed an MoU to cooperate on supervision of cross-border fund management and investment management services. Separately, Hong Kong also signed 24 MoUs with Kuwait on trade, investment management and cargo clearance.

The UAE’s comprehensive economic partnership agreement with Jordan will take effect today with the agreement meant to increase bilateral trade to USD 8bn by 2032. The UAE is planning more than USD 5bn of investment into Jordan’s economy, including railway projects.

XRG, an energy investment firm spun out of ADNOC last year, will take a 38% stake in natural gas fields in Turkmenistan in the Block I project which current produces 400m cu ft of gas. Petronas of Malaysia and a Turkmen company will hold the remaining share of the project.

AD Ports will invest USD 600m in Kazakhstan to expand its logistics investment in the Central Asian Economy. The announcement follows the visit to Kazakhstan of Sheikh Khaled bin Mohamed, crown prince of Abu Dhabi, where separate deals on construction, aviation and renewable energy were also agreed.

Saudi Aramco has signed MoUs worth USD 90bn with American firms following the visit of President Trump to Saudi Arabia. The MoUs cover potential upgrade plans for the SAMREF refinery, low carbon projects and digital infrastructure.

Today’s Economic Data and Events

10:00 UK GDP q/q Q1: forecast 0.6%

10:00 KSA CPI y/y Apr

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

16:30 US initial jobless claims May 10: forecast 228k

17:15 US industrial production m/m Apr: forecast 0.1%

Fixed Income

US Treasuries extended their sell-off overnight with both the front and longer dated parts of the curve falling. The 2yr UST yield rose by 5bps to close at 4.0508% while the 10yr yield dropped more than 7bps to 4.5363%. Market pricing for the June FOMC still stands at about an 8% probability of another 25bps cut.

The UAE is planning to reopen its May 2027 sukuk on May 20 and issue AED 550m at a coupon of 4.57%.

Masdar priced a dual tranche USD 1bn green sukuk. A 5yr tranche priced at 80, much tighter than initial guidance while a 10yr tranche priced at 90. Both tranches are for USD 500m.

Saudi Awwal Bank priced a USD 650m green perp sukuk at 6.5%.

Currencies

Currency markets showed a sharp drop in the US Dollar mid-way through the day on reports that currencies were under discussion in meetings between US and Korean officials. However, the gain in peers against the greenback was faded over the rest of the day with most pairs ending to the favour of the US dollar.

EURUSD closed lower by about 0.1% at 1.1175 while GBPUSD pulled lower by 0.3% at 1.3263. USDJPY, however, managed to move in favour of the Japanese yen with a 0.5% drop at 146.75.

Commodity currencies were all lower with both AUDUSD and NZDUSD down 0.7% each at 0.6428 and 0.5899 respectively. USDCAD closed higher by 0.3% at 1.3983.

Equities

Benchmark global equity markets had a modest session with the Dow Jones lower by 0.2% while the S&P 500 and NASDAQ managed gains of 0.1% and 0.7% respectively. European markets were weaker with the Euro Stoxx down 0.2% and the FTSE lower by 0.2%.

In the UAE the DFM closed near unchanged while the ADX was lower by 0.3%.

Dubai Holding launched an IPO of its Dubai Residential REIT, raising USD 487m. The REIT covers more than 35,000 residential units in Dubai and its estimated total gross asset value stands at USD 5.88bn.

MSCI will add Adnoc Gas, Dewa and Salik to its emerging market index as of June, increasing investor flow to the UAE.

Commodities

Oil prices turned lower overnight with both Brent and WTI futures off by 0.8% at USD 66.09/b and USD 63.15/b respectively. Both benchmarks have dropped even more in early trade today as markets respond to news from Iran that suggests it is prepared to make a deal with the US that would see a return of Iranian exports.

Total commercial US crude inventories rose by 3.45m bbl last week while gasoline and distillate stockpiles drew. Overall there was a build in total stocks. Oil production ticked up by 20k b/d to 13.87m b/d.