The first month of the Trump Presidency has seen rising uncertainty about many of the assumptions that have been taken for granted by markets for decades. This uncertainty is not only about the US economy and policy making, but also has an impact on other parts of the world that rely on the US for trade, security and investments.
- Global macro: The last month since our January edition has been an eventful one, with the Trump Presidency overshadowing developments in the US economy and to some extent in the wider world.
- GCC macro: The largest GCC economies started 2017 on a strong note, with both Saudi Arabia’s and the UAE’s purchasing managers’ indices showing faster expansion in the non-oil private sector in January.
- MENA macro: Inflationary pressures are likely to build across North Africa and the Levant in 2017, particularly in Egypt where November’s EGP devaluation is leading to a spike in imported prices.
- Sector Focus: An overview of Dubai’s real estate sector.
- Emerging Market Focus: India
- Interest Rates: Anticipated pro-growth policies of President Trump are causing higher sovereign yields.
- Credit Markets: Expectations of higher global growth boosted appetite for risk assets leading to tightening of credit spreads during the month.
- Currencies: Constructive US economic data was unable to fully reverse the dollar’s soft start to 2017 as markets continued to show concern over President Trump’s initial focus on protectionism especially in the absence of details about fiscal policy expansion.
- Equities: Notwithstanding the focus on Donald Trump’s policies, equity market investors seem to be coming to grips with the working style of the new US President. The positive sentiment has been helped by better than expected corporate earnings and upbeat economic data.
- Commodities: OPEC managed to achieve a high level of compliance in the first month of its production cut agreement but has it cut too deep too early? So far oil prices have largely shrugged in the face of the strong OPEC figures suggesting other factors have more weight in the current market.
US rates: The market is still more dovish than the Fed
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Source: Emirates NBD Research, Bloomberg
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Emirates NBD Research
