Sheikh Khaled appointed as Abu Dhabi crown prince

Sheikh Khaled bin Mohammed has been appointed as Abu Dhabi’s crown prince, as was widely expected by political analysts. Sheikh Khaled is the eldest son of President Sheikh Mohammed bin Zayed Al Nahyan. He has already held key roles in the main Abu Dhabi entities as chairman of the Abu Dhabi Executive Office since 2019 and a member of ADNOC’s board of directors since 2021 and has thus been involved in the main economic policy initiatives announced over the last few years, including the development of high value manufacturing, space and other technology and of course the energy transition policy of the UAE. Sheikh Khaled is also chairman of the State Security Department. In other appointments, Sheikh Tahnoon bin Zayed and Sheikh Hazza, the President’s brothers, were named deputy rulers of Abu Dhabi. Sheikh Mansour bin Zayed was also appointed UAE Vice President alongside Dubai ruler Sheikh Mohammed bin Rashid. 

Bahrain recorded real GDP growth of 4.1% y/y in Q4, down modestly from the 4.2% recorded the previous quarter. For 2022 as a whole, the economy registered growth of 4.9% which is the fastest pace of growth since 2013, a trend that we have seen throughout the GCC. Non-oil growth was at 6.2% with hotels & restaurants performing particulary strongly with growth of 13.9%, while the oil sector saw a slight contraction of 1.4%.

US pending home sales showed an unexpected rise of 0.8% m/m in February, against forecasts for a -3.0% decline. On an annual basis however, pending home sales are still down -21.1% as higher borrowing costs have dampened activity in the housing market.

UK mortgage approvals in February also posted a surprise gain, with 43.5k approvals against 39.6k in January as mortgage rates edged lower from recent highs. However the number of approvals remains around 40% lower than August 2022 and indicates further softness in home prices.  

Today’s Economic Data and Events

• 16:00 Germany CPI (Mar, prelim, EU harmonized) forecast 0.8% m/m and 7.5% y/y
• 16:30 US initial jobless claims (25 Mar) forecast 195k
• 16:30 US Q4 GDP (third reading) forecast 2.7% q/q annualized.
• 16:30 US Q4 core PCE inflation (third reading) forecast 4.3% q/q.
• Egypt CBE interest rate decision. Forecast: 18.25%.

Fixed Income

• US Treasuries hewed close to a fairly narrow trading range overnight with the 2yr UST yield moving around 10bps from top to bottom before ultimately settling at 4.0989%, up 2bps. The 10yr yield showed relatively less movement, staying close to about 3.55% for much of the day and closing nearly unchanged at 3.5639%.
• European bond markets closed slightly weaker overnight with yields on the 2yr bund up 4bps at 2.321% while gilt yields added almost 2bps to 3.465%.
• Al Rajhi is in the market for a USD 5yr sustainable sukuk, pricing at around +110.  

FX

• The dollar pushed higher against most peers overnight with the broad DXY index up 0.2%. EURUSD closed the day flat at 1.0844 while GBPUSD settled lower, down 0.2% to 1.2314 after a few days of gains. USDJPY jumped by 1.5%, its largest gain since the start of February and settling at 132.86.
• Commodity currencies were more mixed with CAD following the US dollar higher. USDCAD dipped by 0.3% to 1.3559 while AUDUSD fell 0.4% to 0.6684 and NZDUSD dropped by 0.5% to 0.6225.

Equities

• Expectations that the interest rate hiking cycle is nearing its conclusion led to gains in the US equity market yesterday, with all three benchmark indices closing the day sharply higher. The tech-heavy, interest rate-sensitive NASDAQ was the biggest gainer, as it added 1.8% and entered a bull market. The Dow Jones gained 1.0% and the S&P 500 1.4%.
• There was similar positivity earlier in the day in Europe where the composite STOXX 600 closed the day 1.3% higher. The FTSE 100, the DAX, and the CAC added 1.1%, 1.2%, and 1.4% respectively.
• Locally, the DFM added 0.5% while the ADX closed flat. In Saudi Arabia the Tadawul gained 0.3%, while Egypt’s EGX30 closed up 3.2%.

Commodities

• Oil markets snapped a few days of gains with both Brent and WTI lower overnight. Brent futures fell 0.5% to USD 78.28/b while WTI fell by 0.3% to USD 72.97/b. Prices have picked up out of their recent collapse thanks to anxiety that a suspension of supplies from a pipeline linking Iraq to an export terminal in Turkey may be prolonged.
• Crude inventories in the US fell by 7.5m bbl last week along with a decent draw in gasoline stockpiles. Distillate inventories were essentially flat. Oil production in the US dropped by 100k b/d to 12.2m b/d while product supplied edged higher by about 450k b/d to 20.5m b/d.