Egypt taps international markets

Egypt raised USD 2bn in its first international bond issuance since 2023. The deal was structured in two parts with a USD 1.25bn 5yr set at a yield of 8.625% and USD 750m 8yr at a yield of 9.45%. Egypt is rated ‘B-‘ from S&P Ratings. Pricing for both tranches was inside of initial guidance.

There were further signs of softening consumer confidence in the US as the Conference Board index for January dropped to 104.1, down from 104.7 and missing expectations. The drop was mainly as a result of a weaker assessment of current conditions while the expectations component improved month/month to 83.9 from 81.1.

The Federal Reserve holds its first FOMC meeting of the year today and we expect they will maintain the hawkish tone set at the end of last year, highlighting risks to both of their mandates on prices and employment. We do not expect them to adjust rates at the January meeting.

Turkey is considering to increase taxes on lira deposits, according to press reports. A decision on tax rates is due by the end of the month and would follow on an increase in taxes on deposits enforced in November last year.

Today’s Economic Data and Events

• 17:30 US wholesale inventories Dec m/m: forecast 0.2%
• 18:45 CA Bank of Canada rate decision: forecast 3%
• 23:00 US FOMC rate decision upper bound: forecast 4.5%

Fixed Income

• US Treasuries closed nearly unchanged after a volatile session at the start of the week. Yields on the 2yr UST settled at 4.1949% while the 10yr yield closed at 4.5323%.
• Ziraat Bank priced a 5yr at a yield 7.375%, raising USD 750m.

FX

• The US dollar swung back to gains overnight as markets again focused on the threat of tariffs being introduced. EURUSD fell 0.6% to 1.043 while GBPUSD dropped 0.5% to 1.2443. JPY shed a large part of its haven gains from a day earlier with USDJPY rising by 0.7% to 155.54.
• Commodity currencies extended their losses in the week for a second day. USDCAD was higher by 0.2% at 1.4399 while AUDUSD fell 0.6% to 0.6253 and NZDUSD dropped 0.5% to 0.5667.

Equities

• US equity markets recovered overnight as markets called their anxiety over disruption in the AI space. The NASDAQ rallied by 2% while the S&P gained almost 1% and the Dow Jones was higher by 0.3%. European markets were also broadly positive.
• In the UAE, the DFM dropped by 0.3% overnight while the ADX was flat. The Tadawul fared well with a gain of 0.4% while the EGX 30 fell 0.3%. Equity markets in Turkey were all solidly positive.

Commodities

• Oil markets recovered some ground overnight with Brent futures up 0.5% at USD 77.49/b and WTI rallying 0.8% at USD 73.77/b. The API reported a build in US commercial crude inventories of 2.9m bbl last week along with an increase in gasoline inventories. Distillate stockpiles, however, declined.
• Gold prices rallied the day after the anxiety in equity markets, up 0.8%, while industrial metals generally closed weaker. The EU is considering banning imports of Russian aluminium as well as wider sanctions on oil tankers.