Trump extends Iran ceasefire

 US President Donald Trump announced an indefinite extension of the ceasefire with Iran last night while the US naval blockade of Iranian ports remains in place and the Strait of Hormuz is still effectively closed to commercial shipping. The announcement came only hours after the President told CNBC he did not want to extend the truce and that the US military was ready to resume strikes if no deal was reached.

Saudi Arabia saw continued strength in foreign capital inflows in 2025. The stock of inward foreign direct investment rose 13% y/y to SAR 1,099bn at end-2025 per SAMA, accounting for around a third of total foreign investment liabilities of SAR 3,320bn, up 19% y/y, with portfolio investment at SAR 1,315bn and other investment at SAR 907.8bn. On a flow basis, GASTAT data showed full-year 2025 net FDI inflows of SAR 122.4bn, up 53% from SAR 80.0bn in 2024, with Q4 alone contributing SAR 48.4bn on gross inflows of SAR 50.6bn and outflows of just SAR 2.2bn.

Kevin Warsh's Senate Banking Committee confirmation hearing for the Fed chair role struck a hawkish tone. The nominee pushed back firmly on suggestions that he would act as a mouthpiece for the President, argued that inflation is a choice that the Fed must own, and indicated that he would implement a new inflation framework if confirmed. Warsh's path to confirmation before Chair Powell's 15 May term-end remains blocked by Senator Thom Tillis's pledge to vote against him until the Department of Justice probe of Powell over the Fed headquarters renovation is dropped.

US retail sales rose more than expected in March and by the most in a year. The value of retail purchases increased 1.7% in March after a gain of 0.7% in February.

UK businesses accelerated job cutting in March in the first clear sign that the Iran war is weighing on hiring plans. Payrolled employees fell 11k on the month, the steepest drop since November and double the February decline. Vacancies in Q1 dropped to 711k the lowest in almost five years. Labour Force Survey data for the three months to February showed unemployment unexpectedly falling to 4.9%, though this was largely driven by a pickup in economic inactivity. Private-sector wage growth slowed to 3.2% y/y in the three months to February.

Today's Economic Data and Events

11:00 UK CPI inflation y/y Mar: forecast 3.3%

15:00 Turkey One week Repo Rate: forecast 37%

18:00 Eurozone consumer confidence Apr: forecast –17.2

Fixed Income

US Treasuries sold off yesterday as strong March retail sales at 1.7% m/m and the hawkish tone from the Warsh hearing pushed yields higher across the curve. The 2yr yield rose 5.9bps to 3.7791% while the 10yr added 4.1bps to 4.2916%, leaving the curve marginally flatter on the day.

The UAE reopened two treasury sukuk issuances, raising a total of AED 1.1bn. The October 2027 sukuk tap raised AED 550m at a yield of 3.92%, pulling it closer to the nearby m-bill levels and was over-subscribed by 4.5x. The February 2033 sukuk reopening raised AED 550m at a yield of 4.13%, wider than its pre-tap curve levels, and was over-subscribed nearly 5x.

Fitch affirmed their 'A-' rating on SAIB with a stable outlook and their 'A-' rating on Gulf International Bank - Saudi Arabia, also with a stable outlook.

GCC credit markets were broadly unchanged on the day despite the deteriorating geopolitical tone, outperforming EM where the aggregate USD index fell 0.13%. A benchmark GCC USD index was up 0.01%, with sovereigns up 0.01%, corporates up 0.03% and sukuk flat. At the geographic level UAE bonds firmed 0.02% while Saudi Arabia was little changed. The CDS complex told a different story, with spreads widening across the region as the ceasefire expiry loomed: Dubai added 2.70bps, Saudi Arabia 1.49bps, Abu Dhabi 0.54bps, Türkiye 3.81bps, and Egypt a notable 11.84bps to 324.84bps, the highest since the early weeks of the war.

Currencies

The dollar strengthened broadly yesterday on the firm retail sales print and the stalled Iran talks, with the DXY rising 0.30% to 98.394. EURUSD fell 0.37% to 1.1744, GBPUSD declined 0.20% to 1.3508 ahead of UK CPI, and USDJPY rose 0.35% to 159.37 as the haven bid into the yen unwound through the day. USDCHF added 0.33% to 0.7810 and AUDUSD fell 0.36% to 0.7152.

The US dollar also gained against regional and EM peers. USDINR rose 0.41% to 93.4975 and USDTRY was up 0.05% at 44.8938, with both currencies pressured by continued elevated oil prices. The standout was the Egyptian pound, which strengthened 0.39% against the dollar to 51.7775 on continued foreign inflows into local markets.

Equities

US equities closed lower for a second straight session. The S&P 500 lost 0.63% to 7,064.01, the Nasdaq Composite fell 0.59% to 24,259.96, and the Dow Jones Industrial Average shed 293.18 points or 0.59% to 49,149.38. In Europe, the FTSE 100 closed 0.55% lower.

Regional markets were mixed. The DFM rose 0.28% to 5,878.28 while Abu Dhabi's ADX General Index gained 0.20% to 9,861.11. Saudi Arabia's Tadawul closed down 0.19% at 11,344.96 on its third consecutive session of losses.

Commodities

Oil staged a strong rally on Tuesday on growing conviction that the ceasefire would expire without an extension, with Brent futures settling up USD 3.00/b or 3.14% at USD 98.48/b and WTI adding USD 2.52/b or 2.81% to USD 92.13/b. Both crude benchmarks have given back some of those gains in early Wednesday electronic action as markets digested the post-settle ceasefire extension, with Brent trading near USD 98.41/b and WTI back down to USD 89.49/b.

Gold sold off sharply with the spot price falling 2.09% to USD 4,720.04/oz. Silver declined 3.76% at USD 76.73/oz.