UAE non-oil trade reaches record high in 2023

Total UAE non-oil foreign trade reached record levels in 2023, rising to a value of AED3.5 trillion. The announcement, made by His Highness Sheikh Mohammed bin Rashid Al Maktoum, highlighted that non-oil trade with the country’s top 10 partners had risen 26% y/y. Specifically non-oil trade with Turkey, Hong Kong and the USA rose by 103%, 47%, and 20%, on an annual basis, respectively. Comments from Dr. Al Zeyoudi, Minister of State for Foreign Trade, further highlighted the importance of recent CEPA agreements. He noted that non-oil foreign trade with countries with whom CEPAs have either been implemented or are nearing implementation rose 24.5% y/y to a value of AED390.5 billion.

US producer price inflation rose by more than had been expected in January, gaining 0.3% m/m, above expectations of a 0.1% rise. On an annual basis, PPI was 0.9% higher in January. Core PPI rose 0.5% m/m, sharply above consensus expectations, driven by domestic services prices.

The University of Michigan sentiment index rose for the 3^rd consecutive month in February, to reach its highest level since mid-2021. The headline measure rose to 79.6 in February from 79.0 in January. The expectations component, a reasonable indicator of US consumption, also ticked up, rising to a value of 78.4 from 77.1.

UK retail sales volumes, including automotive fuels, rose 3.4% m/m in January. The print was more than double what had been expected and reversed the 3.3% m/m fall observed in December. The picture is broadly similar when automotive fuels are stripped out, with sales volumes gaining 3.2% m/m. The latest data points to some degree of stabilization in consumer spending, after the UK economy slipped into technical recession in Q4 2023.

The People’s Bank of China held interest rates on the 1-year medium-term lending facility unchanged at 2.5% on Sunday. The move was consistent with expectations given that the Yuan slipped last week, coming under pressure in offshore trading.

Today’s Economic Data and Events

No data releases of note

Fixed Income

• Yields on US treasuries rose on Friday on the back of a higher-than-expected PPI print. The 2yr yield gained 7bps to 4.6416% and the 10yr yield rose by 5bps to 4.2792%. Yields on both the 2yr and 10yr ended the week higher, up 16bps and 10bps, respectively.
• European bond yields were also generally higher on Friday. Both the UK 2yr and 10yr Gilt yield gained 5bps to reach 4.6111% and 4.1066%, respectively. The 10yr German Bund rose 4bps to 2.401%.

FX

• The dollar spot index was broadly unchanged on Friday, leaving it 0.2% higher than the week prior. There were marginal gains in the EURUSD and GBPUSD, which rose 0.05% and 0.02%, to 1.0777 and 1.2602, respectively. USDJPY gained 0.19% to 150.21.
• Commodity currency moves were mixed on Friday. AUSUSD rose 0.1% to 0.6531, NSZUSD gained 0.278% to 0.6124, while USDCAD increased 0.15% to 1.3485.

Equities

• Higher producer price inflation dragged US equity markets lower on Friday, with major indices also ending the week lower. The Dow Jones fell 0.37%, the S&P 500 declined 0.48% and the NASDAQ dropped 0.82% on the day.
• Locally, the ADX closed up 0.47% and the DFM gained 0.37%.

Commodities

• Oil prices rose on Friday driven by rising geo-political tensions. Brent futures climbed 0.74% to close at USD 83.47/b, while WTI closed up 1.5% at USD 79.19/b.