Egypt announces PIF investment

Egypt’s cabinet has announced that Saudi Arabia’s Public Investment Fund is going to invest USD 5bn in Egypt as part of a ‘first phase’ of investments in the country. Egypt has enjoyed significant support from GCC states over the past several years, in particular the UAE following the announcement in February of the Ras el-Hikma development which kickstarted the turnaround in Egypt’s fortunes. Egyptian Prime Minister Mostafa Madbouly had recently attended meetings with Crown Prince Mohammed bin Salman and Saudi investment minister Khalid al-Falih in Riyadh ahead of the announcement.

CPI inflation in Saudi Arabia ticked up modestly to 1.6% y/y in August, up from 1.5% in July. The August print was in line with the average over the year so far, with headline price pressures over 2024 set to average lower than over the past several years (an average 2.6% y/y over 2021 to 2023). More than half of the components of the CPI basket (seven out of 12) have been in deflationary territory for the past several months, including tobacco, clothing and footwear, and transport. However, the largest basket component, food and beverages prices, were up 0.9% y/y, while the second largest, housing and utilities prices, continued to rise sharply, up 8.9% y/y in August and an average 8.6% over the year so far. On a monthly basis, headline price growth was 0.1% for the third month running, with food and beverages prices up 0.4% m/m and housing and utilities also up 0.4%.

Today’s Economic Data and Events

13:00 Germany ZEW survey expectations, September. Forecast: 17.0

13:00 Germany ZEW survey current situation, September. Forecast: -80.0

16:30 Canada CPI inflation, % y/y, August. Forecast: 2.1%

16:30 US retail sales, % m/m, August. Forecast: -0.2%

17:15 US industrial production, % m/m, August. Forecast: 0.2%

Fixed Income

• US treasuries continued to rally yesterday, with yields on the 2yr dropping 3bps to 3.5509%, the lowest level since September 2022, as expectations of a bigger 50bps move from the Fed on Wednesday gathered momentum. The 10yr yield also fell 3bps, to 3.6176%.

FX

• The dollar index fell to an eight-month low yesterday ahead of the Fed meeting this week. It closed down 0.4% on the day to 100.763.
• Gains against the greenback were broad-based. Of the majors, GBP closed up 0.7% to 1.4216, while EUR added 0.5% to 1.1133 and JPY gained 0.2% to 140.62.
• AUD and NZD both added 0.7%.

Equities

• Equity markets started the week in a relatively muted fashion after Friday’s gains. With most Asian markets closed, the focus began on Europe where only the FTSE 100 closed up, adding 0.1%. The DAX lost 0.4% and the CAC closed 0.2% lower.
• The US was mixed, with the NASDAQ giving up some of last week’s strong gains as it slipped 0.5%, but the S&P 500 (0.1%) and the Dow Jones (0.6%) both closed higher.
• Locally, the DFM added 0.3% and the ADX closed 0.4% higher.

Commodities

• Oil prices picked up on Monday as traders balanced the likely move by the Fed, news out of Libya, and the weakening demand picture out of China. Brent futures closed up 1.6% to USD 72.8.b, while WTI added 2.1% to USD 70.1/b.