Oman inflation slowed in May

Markets were relatively quiet with much of the US activity closed for a US holiday. China’s president, Xi Jinping, met the US secretary of state Anthony Blinken where he said that it was “very good” that progress had been on “agreements on some specific issues” although there was no clarity on what was discussed. Tense US-China relations will act as a handbrake on the global economy if companies grow more reluctant to make bilateral investments, particularly in the technology sectors.

Egypt and the World Bank’s International Finance Corporation (IFC) have signed a five-year agreement that will see the IFC partner with Egypt on its privatisation programme of state assets. The IFC will help with the structuring and preparation of assets for sale, and will ‘focus on harnessing private capital and know-how to manage state-owned assets.’ The sales are a major pillar of Egypt’s economic reform programme.

Oman's CPI inflation slowed to 0.9% y/y in May, from 1.1% in April. This marked the slowest pace of annual price growth since March 2021. Prices were 0.3% lower in May compared with April as a reduction in power tariffs brought utilities prices lower. Restaurants and hotels recorded the strongest rate at 3.7% y/y.

Today’s Economic Data and Events

• 16:30 US Housing starts May: forecast 1.4m

Fixed Income

• US markets were closed for a public holiday but Treasuries have opened up slightly weaker today. The 2yr UST yield is trading at around 4.744% while the 10yr is close to 3.806%. European bonds closed weaker yesterday as ECB officials continue to amp up the hawkish rhetoric. Bund yields added 4bps to 2.513% while the 10yr gilt yield added almost 8bps to 4.483%.

FX

• Most currencies drifted lower against the dollar overnight with little in the way of a fundamental catalyst. EURUSD fell 0.2% to close at 1.0921 while GBPUSD sank the same amount to settle at 1.2792. USDJPY added 0.1% to close at 141.98.
• Commodity currencies also weakened against the dollar with USDCAD marginally higher at 1.321 while AUDUSD fell 0.4% to 0.6851 and NZDUSD dropped by 0.6% to 0.6201.

Equities

• The recent run in equity market gains fizzled out yesterday with US markets closed and little in the way of data releases. Those major global indices that were open mostly ended the day lower, starting in Asia where the Shanghai Composite, the Hang Seng, and the Nikkei lost 0.5%, 0.6%, and 1.0% respectively.
• The losses continued later in the day in Europe where the FTSE 100 closed down 0.7% and both he DAX and the CAC ended 1.0% lower.
• Locally, the closed down 0.1% and the ADX up 0.1%. The Tadawul lost 0.8% on the day.

Commodities

• Brent futures dropped 0.7% overnight as markets continue to worry about a weak Chinese economy and the impact on oil demand. WTI futures did not settle as a result of the US federal holiday.