Dubai inflation rises to 3.15% in January

Headline CPI inflation in Dubai accelerated to 3.15% y/y in January, up from 2.89% in December. On the monthly measure, prices were unchanged. The housing & utilities component of the CPI basket remains the primary source of inflationary pressure in Dubai, with y/y inflation of 7.2% in January. In contrast the transport component of the price basket remained in deflationary territory as prices were down 2.4% y/y even as they rose 1.2% m/m. The diminished drag from transport was the key driver of change in the headline y/y measure in January and is reflective of the petrol prices at the pump at the start of the year. Despite the pick-up in price growth at the start of the year we anticipate that inflation will trend lower over 2025, averaging 2.8% y/y. Persistent dollar strength and lower oil prices should be supportive of slower price growth, although robust economic growth, global trade war risks, and ongoing upwards pressure from housing pose upside risks to this outlook.

President Trump, responding to questions during a cabinet meeting yesterday, suggested that the European Union would be subject to 25% tariffs. While President Trump specifically mentioned tariffs on European automotive imports to the US, it isn’t clear whether the proposed tariff would apply more broadly to other goods too.

Today’s Economic Data and Events

• 17:30 US GDP second estimate. Q4. Forecast: 2.3% q/q
• 17:30 US Durable goods orders, January. Forecast: 2.0% m/m
• 17:30 US Initial jobless claims, w/e 22 Feb. Forecast: 221k

Fixed Income

• US treasuries rallied on Wednesday with strong demand during a 7-year note auction. Yields on the 2yr bond dropped 2bps to 4.0716%, while the 10yr yield fell 4bps to reach 4.2562%.
• Yields on major European bond were weaker across the board, with the largest declines in France and Portugal. The 10yr Bund dropped just over 2bps to 2.431%, while the 10yr Gilt fell by a more marginal 0.6bps.
• Tabreed is pricing a USD 5yr green sukuk at +120.
• Doha Bank priced a USD 500mn 5yr at +120.

FX

• The dollar spot index saw muted gains on Wednesday, rising 0.1%. EURUSD fell 0.28% to 1.0485, while GBPUSD gained a marginal 0.08% to reach 1.2676 and USDJPY gained 0.05% to 149.1.
• Commodity currencies fell against the dollar for a fourth consecutive day. AUDUSD fell 0.6% to 0.6305 and NZDUSD fell 0.54% to reach 0.5695. USDCAD gained 0.17% to 1.4338.

Equities

• Moves in US equity markets were mixed on Wednesday, with comments from President Trump creating uncertainty about tariffs on Mexico, Canada and the EU. The NASDAQ rose 0.26%, the Dow Jones fell 0.43% and the S&P 500 was broadly flat. Markets appeared underwhelmed by Nvidia’s Q1 guidance, which pointed towards solid profit growth but tighter margins.
• European equity indices saw strong gains on the day, driven by robust earnings reports. The Eurostoxx 50 gained 1.47%, the CAC 40 rose 1.15% and the DAX increased by 1.71%. The FTSE 100 gained 0.72%.
• Locally, the DFM closed 0.18% higher and the ADX gained 0.48%. The Tadawul declined by 0.56% on the day.

Commodities

• Oil futures saw further declines on Wednesday, as prospects of rising supply outweighed news of a drop in US oil inventories last week. Brent fell 0.67% to reach USD 72.53/b, and WTI declined 0.45% to USD 68.62/b.