Trump to visit GCC this week

US President Donald Trump will visit Saudi Arabia, the UAE and Qatar this week including attending a Gulf-US summit where representatives from all of the GCC countries will be present. The focus of the visit is likely to be on bilateral investment, particularly GCC investment towards the US. Earlier this year, Saudi Arabia said it would invest USD 600bn into the US over the next four years while the UAE will invest USD 1.4trn over a 10 year period, investing into digital infrastructure, energy and manufacturing projects.

Inflation in Egypt was marginally higher in April at 13.9% y/y, up from 13.6% a month earlier. On a sequential basis, inflation was up by 1.3% m/m in April versus 1.6% in March. Ongoing cuts to subsidies, part of Egypt’s IMF programme, contributed to the anticipated pick up in inflation for April while the broader disinflationary path remains intact. Fuel prices were raised in April by nearly 14% in line with the IMF programme. Food prices rose by 6% y/y in April, slower than they were a month earlier. The Central Bank of Egypt next meets on May 22 and will likely be able to look through the subsidy reduction induced uptick in inflation.

Industrial production in Turkiye rose by 2.5% y/y in March, up from a contraction of 1.9% a month earlier. Output was higher across all sectors with manufacturing increasing by 2%, reversing a 2.5% drop a month earlier, while mining and utility provision were both up strongly. On a monthly basis output was up by 3.4% m/m.

Saudi Aramco reported a drop in Q1 net income of nearly 5% to SAR 97.5bn. The company also announced that it would cuts its divided by USD 10bn from Q1 2024 while free cash flow was below the expected dividend level. Earlier this year Aramco said it would substantially cut the “performance linked” element of the dividend it pays to the Saudi government and PIF, tightening cash flows for the government.

Oman is reportedly considering to sell stakes in its natural gas fields, seeking investors for minority stakes according to reports in Bloomberg.

US and China trade negotiations began over the weekend in Switzerland with the US representatives claiming “substantial progress” and that the talks were productive, according to US Treasury Secretary Scott Bessent. China’s vice premier, He Lifeng, said the talks had been “constructive” and that both countries will establish a channel to maintain dialogue on trade.

Today’s Economic Data and Events

• 11:00 TU retail trade March
• 22:00 US Federal budget balance Apr: forecast USD 256bn

Fixed Income

• US Treasuries edged weaker at the end of the week with the 2yr UST closing at 3.891%, up slightly less than 2bps. The 10yr UST yield oscillated throughout the day but closed unchanged at 4.3785%. Market pricing for Fed rate cuts after last week’s FOMC has settled at slightly more than 2.5 cuts for the year as a whole with June currently at about a 20% probability of a cut.
• High yield and emerging market bonds closed higher at the end of the week though bonds across the GCC were notable outliers with declines across nearly all geographies and sectors.
• The CBUAE will carry out its bi-monthly M-Bill auction today with plans to sell AED 8bn of 28-day bills, AED 4bn of 70-day, AED 3.2bn of 98-day and AED 12bn of 266-day.

FX

• The US dollar was broadly weaker at the end of the week, selling off against major peers. EURUSD ended the say at 1.1250, up 0.2%, while GBPUSD added about the same amount to close at 1.3306. The Japanese yen was stronger, with USDJPY falling by 0.4% to 145.37.
• The Indian rupee pulled strong at the end of the week with a 0.4% drop to 85.3812 despite the elevated geopolitical situation. Turkish lira, however, was weaker on Friday with a rise of 0.4% in USDTRY to 38.7594.

Equities

• US equity markets had a muted close to the week with the Dow Jones lower by 0.3% and the S&P giving up less than 0.1%. European markets fared better, however, with the Euro Stoxx 50 up by 0.4% and the FTSE 100 adding 0.3%.
• In the UAE both the DFM and ADX closed nearly unchanged at the end of last week while the Tadawul closed its week on Thursday with a loss of 0.3%.
• Turkey’s primary equity index closed Friday up 1.2% while the EGX 30 in Egypt fell by 0.2% in its final trading day.

Commodities

• Oil prices managed to add some gains in the final trading sessions of last week with Brent futures up 1.7% on Friday at USD 63.91/b while WTI added 1.9% to close at USD 61.02/b. Both contracts put the heavy selling on the OPEC+ plans to accelerate production increases behind them with gains over much of the week.
• OPEC and the IEA will publish their monthly oil market reports this week, with continued focus likely to fall on demand estimates.
• Gold prices were higher in the final session of the week with spot gold up 0.6% at USD 3,325/troy oz. Silver prices also gained, up 0.8% while there were broad moves higher across the rest of the industrial metals complex, helped by some positive signals coming from US-China trade talks.