President Trump sworn in for second term

President Trump was inaugurated for his second term in office yesterday and announced a number of executive orders with implications for US and global macroeconomics and markets. Notably, while he did not initially announce major tariffs in the near term, he later stated that there would be a 25% tariff imposed on imports from Canada and Mexico by February 1. Both countries have said that they would retaliate in the event of tariffs, risking a trade war between the members of the US-Mexico-Canada Agreement. Other notable announcements included ending the Biden-imposed pause on LNG terminals, and a threat to impose tariffs on the EU if it did not start buying more US oil as Trump seeks to drive an energy renaissance in the US. He will take the US out of the Paris accords once again and is withdrawing from the World Health Organisation in a blow to global multilateralism. Trump has also declared a number of measures around immigration including labelling the southern border a national emergency, which could prove inflationary through its potential impact on the labour market.

The Dubai Land Department has announced that a total of 457 plots along the Sheikh Zayed Road and in al-Jaddaf will be eligible for private property owners to convert to freehold regardless of their nationality, subject to a fee proportionate to the value of the property. The move is expected to drive up demand for these plots as locally based and international non-Emirati buyers will now be able to invest.

Egypt’s trade balance for November stood at negative USD 3.7bn, compared with -USD 3.7bn in October. Imports were up 15.8% y/y at USD 7.3bn, while exports, including re-exports, rose 10.9% to USD 3.6bn.

Today’s Economic Data and Events

11:00 ILO unemployment rate 3mths, %, December. Forecast: 4.4%

14:00 Germany ZEW survey expectations, January. Forecast: 15.3

14:00 Germany ZEW survey current situation, January. Forecast: -93.1

17:30 Canada CPI inflation, % y/y, December. Forecast: 1.8%

Fixed Income

• US treasury markets were closed on Monday but they have rallied on Tuesday with yields falling as tariff announcements were initially less drastic than expected.

FX

• The dollar lost ground against its peer currencies on Monday as President Trump did not immediately announce tariffs on the US’ three primary trading partners. GBP closed up 1.3% at 1.2328 while EUR added 1.4% to 1.0416.
• Notably, MXN closed up 1.4% to 20.5046 while CAD added 1.2% to 1.4310. However, both currencies are registering notable losses today since the executive order was signed.

Equities

• There were modest gains in European equity markets yesterday. The FTSE 100 closed up 0.2% while the CAC added 0.3% and the DAX 0.4%.
• US markets were closed yesterday.

Commodities

• Oil prices whipsawed yesterday, buffeted by President Trump’s comments on domestic energy and tariffs on Canada. Prices ultimately ended the day lower with Brent futures falling 0.8% to USD 80.2/b, while WTI markets were closed for the US public holiday but are trading 1.5% lower in early trading today.