UAE federal budget cycle for 2027-29 underway

The UAE’s Ministry of Finance has launched the federal budget cycle for 2027-2029, transitioning from traditional annual planning to a strategic three-year framework that integrates artificial intelligence and digital tools to enhance fiscal sustainability and government efficiency. Led by H.H. Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum and aligned with the “We the UAE 2031” strategic plan, this budget cycle builds on four previous cycles totalling approximately AED 900bn while maintaining strong financial fundamentals with public debt at just AED 62.1bn and federal assets reaching AED 464.4bn. The new approach focuses on high-impact sectors including education, healthcare, and social welfare, while dramatically improving operational efficiency by reducing budget preparation steps from 50 to 10 and shortening procurement cycles from 60 days to under six minutes, transforming the Ministry of Finance from a supervisory body into a strategic enabler that supports the UAE Centennial 2071 objectives.

Türkiye and the UAE are exploring more bilateral investments into renewable energy and hydrocarbons, according to a statement from the Turkish energy minister. 

Governance of the Federal Reserve was thrown into question again overnight as US President Donald Trump reportedly surveyed policymakers in his Republican party as to whether he should fire Fed chair Jerome Powell. The president later ruled out the idea, saying it was “highly unlikely, unless he has to leave for fraud.”

Bahrain has signed USD 17bn worth of investment deals with the US to expand economic ties between the two countries. The investments will cover technology infrastructure in Bahrain, aviation links and a USD 2bn industrial partnership focused on the aluminium industry in the US.

UK inflation unexpectedly surged to 3.6% y/y in June 2025, up from 3.4% y/y in May, marking the highest level since January 2024 and exceeding economists’ forecasts, driven primarily by rising transport costs alongside food price inflation accelerating to 4.4%. Core CPI inflation, which excludes volatile energy and food prices rose to 3.7% y/y up from 3.5% y/y in May. The spike comes as businesses grapple with the Labour government’s April tax increases and higher minimum wage rates. The Office for Budget Responsibility had predicted these policy changes would add 0.2% to consumer prices as businesses pass costs on to consumers, a forecast now materializing in the inflation data. Despite the higher-than-expected reading, the Bank of England is still expected to cut interest rates by 25 basis points at their August 7 meeting, as the UK economy contracted for a second consecutive month in May.

Today’s Economic Data and Events

10:00 UK unemployment Rate 3Mths: Forecast 4.6%

16:30 US initial Jobless Claims: Forecast 234k

Fixed Income

Market anxiety over governance of the Federal Reserve prompted a sharp rally in US Treasuries overnight with the 2yr UST yield falling from almost 3.96% to less than 3.86% before edging higher on the close. On the day, the 2yr yield was lower by almost 5bps at 3.8917%. The 10yr UST yield fell about 3bps to 4.4553%. Market expectations for rate cuts this year are broadly unchanged.

GCC credit markets were bid higher overnight though gains were relatively muted.

FX

Market nervousness about the Fed helped to push peer currencies higher against the US dollar overnight. USDJPY dropped almost 0.7% to 1477.88 while EURUSD was stronger by about 0.3% at 1.1641. GBPUSD also managed about a 0.3% gain to 1.3422.

In emerging markets, USDTRY pushed higher to 40.2246 while Indian rupee also depreciated with USDINR up 0.15% at 85.9438.

Equity Markets

The US equity markets closed in the green. The S&P 500 advanced 0.32% to close at 6,263.70, the Nasdaq gained 0.25% to 20,730.49, and the Dow Jones rose 0.53% to 44,254.78.

Both major European indices closed lower today, with the FTSE 100 experiencing a slight decline of 0.13% and the EuroStoxx falling by 1%.

Locally, ADX General increased 0.3% to 10,176.33. First Abu Dhabi Bank PJSC contributed the most to theindexgain, increasing 2.6%. Umm Al Qaiwain General Investment Co. had the largest increase, rising 4.7%.

DFMGI rose 1% to 5,974.43. Emirates NBD Bank PJSC contributed the most to the index gain, increasing 3.7%. Dubai National Insurance & Reinsurance PSC had the largest increase, rising 8.8%.

Saudi Arabia’s Tadawul closed down by 0.51%.

Commodities

Oil markets had a quiet session with Brent crude closing at USD 68.52/b down 0.3%, while WTI fell 0.2% to USD 66.38/b. EIA data showed a draw in US crude inventories of more than 4m bbl while gasoline stockpiles were higher. Total commercial stockpiles across all products rose by 9.3m bbl. Production was near unchanged at 13.37m b/d.

Gold gained 0.7% closing at USD 3,347.84 per ounce and silver increased 0.5% to USD 37.89.