Inflation on target in India

Inflation in India came in basically in line with expectations for April at 4.83% y/y. On a monthly basis prices were up 0.5% m/m versus a decline a month earlier. Energy prices continued to drift lower last month with the fuel and lighting component down 4.2% y/y while housing prices added 2.7% y/y. Food prices rose by 8.7% y/y in April, their fastest pace since December 2023.

Turkey’s current account deficit widened in March to USD 4.54bn from USD 3.64bn in February. The goods deficit expanded by about 9% to USD 5.19bn while the overall goods and services deficit widened to USD 2.95bn in March from USD 2.67bn a month earlier. Net FDI turned negative last month after several strong months of inflows while portfolio investment also turned into an outflow in March. Elsewhere, the government announced substantial spending cuts for the next three years including on vehicles, buildings and new hires. However, construction work related to earthquake repair will be prioritized according to press reports.

The IMF concluded their staff visit to Oman and expect the economy to grow by 0.9% in 2024 as oil production restraint weighs on growth. For 2025, the fund expects a strong bounce of 4.1% growth. Non-oil growth will be 2.6% this year and is estimated at 3.2% for 2025. The IMF also remarked on how “favourable oil prices” are helping to improve Oman’s fiscal and external accounts and estimated that central government debt fell to 36.5% of GDP in 2023 from more than 40% a year earlier.

Today’s Economic Data and Events

• 10:00 GE CPI y/y Apr (F): forecast 2.2%
• 10:00 UK unemployment rate 3mths Mar: forecast 4.3%
• 13:00 ZEW survey expectations May: forecast 46.4
• 16:30 US PPI final demand y/y Apr: forecast 2.2%

Fixed Income

• US Treasuries closed the day near unchanged as the market looks ahead to the US inflation print out later this week. The 2yr UST yield closed at 4.8612% while the 10yr closed at 4.4865%.
• The Central Bank of the UAE carried out multiple m-bill auctions on May 13. It raised AED 2bn of 28-day bills at a yield of 5.54%, AED 1bn of 42-day m-bills at 5.61%, AED 1bn of 126-day m-bills at 5.67% and AED 3bn of 294-day m-bills at 5.6%.
• Moody’s affirmed their ‘B2’ rating on Bahrain’s sovereign with a stable outlook.
• QNB Finansbank has mandated banks for a USD 5yr sustainable bond.

FX

• It was a relatively quiet day for macro data but the dollar pitched lower against the Euro. EURUSD added 0.2% to 1.079 while GBPUSD also got a pick up, rising by nearly 0.3% to 1.2559. USDJPY moved against the yen, rising by 0.3% to 156.22.
• Commodity currencies had a relatively muted close with USDCAD moving slightly lower to the benefit of the Loonie along with a similar small rise for AUDUSD. NZDUSD, however, edged lower.

Equities

• Global equity markets had a soft start to the week. The Dow Jones dropped 0.2% while the S&P 500 closed near unchanged. In the US the NASDAQ managed to record the only positivity, up 0.3%. European markets were also softer with the FTSE down 0.2% and the Euro Stoxx dropping by 0.1%.
• Asian markets have opened more positively in early trading today with the Nikkei, Hang Seng and CSI all moving higher.
• Regional markets were quiet with a bias toward positivity. The DFM and ADX both closed marginally higher while the Tadawul had a 0.4% gain.

Commodities

• Oil futures nudged higher overnight with Brent closing at USD 83.36/b, up 0.7%, while WTI added 1.1% to close at USD 79.12/b. There were few fundamental catalysts to shift prices at the start of the week with markets looking ahead to releases of the OPEC and IEA monthly oil market reports later this week.