US unemployment benefit claims fall back at the start of February

US Initial jobless claims fell in the week ending 3 February, after rising for the past 3 weeks. The level of initial claims fell to 218K, from 227K the week prior. Despite the fall, the 4-week moving average rose to a 6-week high. Continuing claims also fell, declining by 23K to 1,875K in the week ending 27 January. There may yet be further rises the claimant count in coming weeks with increasing media reports of large companies laying off workers.

Egypt’s headline CPI inflation slowed to 29.8% y/y in January, down from 33.7% the previous month. This marked the slowest pace of annual price growth since last January, with base effects from EGP devaluations passing through helping to bring it down. On a monthly basis, price growth accelerated to 1.6%, from 1.4% in December, with the CBE noting ongoing pressures on the monthly measure when it implemented its surprise 200bps hike last week. The government has this week announced a 50% increase to the minimum wage for public sector workers which could further stoke inflationary pressures.

Turkey’s new central bank governor, Fatih Karahan, presented the bank’s latest economic projections on Thursday. The Bank continues to expect annual inflation to slow to 36% by the end of 2024, from a value of just under 65% y/y in January. Prior to Karahan’s appointment the Bank had indicated that it anticipated that rates were likely to have peaked, at 45%. Comments made by the new governor suggest that there may however still be room for further rate hikes.

The ECB’s latest economic bulletin reiterated the bank’s assessment that the current policy rate is at a level consistent with returning inflation to target, if “maintained for a sufficiently long duration”. The governing council expect near-term growth to remain weak, with risks biased to the downside due to the potential for geo-political risks to reduce global trade.

Today’s Economic Data and Events

No key data scheduled for release.

Fixed Income

• Continued strength in labour market data, together with comments from several Fed officials, saw US Treasury yields rise marginally again on Thursday. Both the 2yr and 10yr UST yields gained 3bps to reach 4.4540% and 4.1540%, respectively. Yields were also higher in other major European bond markets, with the UK 10yr Gilt gaining 6bps to 4.0491% and the German 10yr Bund up 4bps to 2.352%.

FX

• The dollar spot index gained 0.1% on Thursday, with moves within the basket of currencies mixed. EURUSD rose 0.06% to 1.0778, while GBPUSD fell 0.07% to 1.2617. USDJPY rose 0.77%, to reach 149.32.
• Commodity currency moves against the dollar were also mixed on Thursday. AUDUSD fell 0.43% to 0.6492, NZDUSD fell 0.26% to 0.6097, while USDCAD fell 0.04% to 1.3458.

Equities

• Major US equity indices made modest gains on Thursday. The Dow Jones rose 0.13% and the NASDAQ gained 0.24%. The S&P 500 index briefly rose above the historic 5000-mark, before falling back to end the day up by 0.06%. European markets, in general, rose on the day. The Eurostoxx 50 gained 0.68%, the Dax rose 0.25%, the CAC 40 increased by 0.71%. The FTSE, in contrast, fell 0.44%.
• Locally, the DFM fell 0.07% on Thursday, while the ADX gained a marginal 0.03%.

Commodities

• Oil prices rose sharply on Thursday, driven by continued geo-political tensions in the Middle East. Brent futures increased 3.06% to USD 81.63/b while WTI gained 3.2% to USD 76.22/b.