26 January 2021
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Daily Outlook: More US stimulus may take time

Monday was a choppy day for markets

By Daniel Richards

  • Janet Yellen has been confirmed as the first female US Treasury secretary, with a Senate vote of 84-15.  Separately, President Biden acknowledged that it would take several weeks to pass additional stimulus measures.  If the White House is unable to gain sufficient Republican support for a new package, using the budget reconciliation process means legislation could only be approved in March. 
  • The German IFO business climate index declined to 90.1 in January from 92.2 in December, slightly lower than the median Bloomberg forecast of 91.4. Both the expectations and current assessment indices were weaker as tighter restrictions to contain the spread of the coronavirus continued to weigh on sentiment. 
  • Kuwait released its budget for the fiscal year starting 1 April 2021, projecting a deficit of KWD 12.1bn (USD 40bn). Both revenue and expenditure are set to rise from the 2020/21 budget, which had to be reduced following the sharp Covid-related drop in oil prices in Q2 2020.  Kuwait will not transfer 10% of its oil revenue to the Future Generations fund in the coming fiscal year, but parliament has yet to approve a new debt law that would allow Kuwait to tap bond markets for financing. The Emir reappointed Sheikh Sabah Al Khaled to form a new government this week, after the previous government resigned in the face of opposition from parliament.  
  • In the UAE a new national tourism council has been created to support the sector’s recovery by introducing incentives to boost growth and investment and revising policy and legislation where necessary.  The Emirates Tourism Council will be chaired by the minister of state for entrepreneurship and SMEs, Dr Ahmad Al Falasi.

Today’s Economic Data and Events







UK Jobless Claims Change



UK ILO 3m Unemployment Rate



US Conference Board Consumer Confidence



Richmond Fed Manufacturing Index



Source: Bloomberg, Emirates NBD Research

Fixed Income

  • A choppy tone to markets in the early American session helped US treasuries rally across the curve. Yields on 2yr UST moved back below 0.12% while 10yr UST yields fell more than 5bps, their single largest drop since the US election, and closed at 1.0295%. Potential delays to a new US stimulus package also helped to support bond markets at the expense of risk assets with gains across European and Asian IG bonds.
  • APICORP, a regional energy focused lender, has mandated banks for a USD 5yr issue as part of its USD 3bn GMTN programme.
  • Ziraat Bank in Turkey has also tapped banks for a USD 5yr issue that will have sustainable objectives.


  • FX markets were quiet on Monday with most major currencies ending the day flat. The DXY index closed slightly higher at 90.340 while the EUR fell by over 0.2% following disappointing German IFO Business Climate readings.


  • European equities struggled yesterday, as fears over extended lockdowns pushed travel firms in particular lower. The FTSE 100 lost -0/8%, while the CAC (-1.6%) and the DAX (-0.7%) fared even worse.
  • Things were brighter in the US as both the S&P 500 (0.4%) and the NASDAQ (0.7%) ended higher after a choppy session. The Dow Jones lost -0.1%.
  • Within the region, the DFM gained 0.3% and the Tadawul 0.2%. Major Asian equity indices are all in the red in early trading this morning.


  • Oil prices are showing little conviction in breaking out of their current trading ranges. Brent futures managed a gain of 0.9% overnight to settle at USD 55.88/b but has since given up a considerable amount of that move higher. Likewise WTI added almost 1% to close at USD 52.77/b but is trading lower this morning.
  • Supply disruptions across OPEC+ are helping to provide a floor in the near term. Iraq will cut output sharply to make up for previous over-production compared with its OPEC+ quotas while pipelines in Libya have been blocked because of leaks.
  • However, China’s government has discouraged intra-city travelling for the upcoming Lunar New Year holidays, threatening what should be a decent seasonal pick-up in demand.
  • Gold markets oscillated ahead of the FOMC later this week. Spot prices closed essentially unchanged at USD 1,860/troy oz.

Click here to download charts and tables

Written By

Daniel Richards Senior Economist

Edward Bell Head of Market Economics


Emirates NBD Research Research Analyst

Khatija Haque Head of Research & Chief Economist

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