PIF releases annual report

Saudi Arabia’s Public Investment Fund (PIF) released its annual report for 2023 yesterday. Key takeaways from the report include the figures that it had USD 765bn at the close of the year, up 29%. This figure had risen further to USD 925bn by July of this year. There were 23 companies established over the year and PIF has been responsible for generating a total of 730,249 jobs directly and indirectly since 2018.

In the absence of major data releases this week barring the US PMI survey results, markets will be looking to commentary from officials around the future path of interest rates and economic policy. On Wednesday, the release of the meeting minutes from the July FOMC meeting should give some clearer insight into officials’ reasoning when they opted to keep rates on hold, and how close they came to starting their easing cycle. With the annual Jackson Hole symposium starting this week, and Jerome Powell set to make his address on Friday, we will be looking for any indication that the FOMC is committing to start cutting rates in September, as we, and markets, anticipate.

Meanwhile, the Democratic National Convention began in Chicago yesterday, with President Joe Biden set to address the conference. Vice President and Democratic candidate, Kamala Harris, made a surprise appearance but is due to speak in more detail on Thursday, and we will be watching to see if there is any elaboration on her potential economic policies should she win the November election. On Friday last week she laid out plans regarding combating ‘price gouging’ by companies and providing help to first-time home buyers.

Central Bank of Egypt Governor Hassan Abdalla has had his term renewed for another year by President Sisi. This is a positive signal for policy continuity as the country goes through a period of economic reform following a renewed and augmented IMF deal agreed earlier this year. With headline CPI inflation falling to 25.7% y/y in July, putting real rates in positive territory, we hold to our view that the CBE will start easing policy in Q4, forecasting a cumulative 200bps of cuts by year-end.

Today’s Economic Data and Events

13:00 Eurozone CPI inflation, % y/y, July Final. Forecast: 2.6%

15:00 Turkey central bank decision. Forecast: 50.00%

16:30 Canada CPI, % y/y, July. Forecast: 2.5%

Fixed Income

• There was little concrete movement in US treasury yields as the week began, with traders awaiting what might come out of the Jackson Hole speeches later in the week. Yields on the 2yr closed up 2bps at 4.0660%, while the 10yr yield closed down 1bps at 3.8711%.

FX

• The dollar index fell 0.6% against its basket of peers yesterday, taking it down below the 102 level for the first time this year as bets on imminent rate cuts from the Fed have weakened the greenback.
• EUR added 0.5% to 1.1085, a new high for the year for the currency, while GBP gained 0.4% to 1.2991. JPY strengthened 0.7% against USD to 146.59.

Equities

• Asian equities started the week mixed, with gains on the Hang Seng (0.8%) and the Shanghai Composite (0.5%) but declines on Japanese stock markets with the Nikkei closing down 1.8% and the Topix 1.4%.
• In the US, the Dow Jones closed up 0.6%, the S&P 500 added 1.0%, while the NASDAQ closed 1.4% higher.
• Locally, the DFM closed down 0.1% while the ADX added 0.2% on the day.

Commodities

• Oil prices started the week on the backfoot, with declines on both benchmarks as peace talks around the Gaza conflict seemingly gained momentum, further easing risk premia that have supported prices for months.
• Brent futures closed down 2.5% at USD 77.7/b, while WTI ended the day 3.0% lower at USD 74.4/b.