UAE non-oil trade grows

Non-oil exports in the UAE rose by 8% y/y in the first six months of 2022 to AED 180bn while re-exports were up by 20% y/y in the same period to AED 300bn. Taken with an increase of 19% in imports to AED 580bn, total non-oil trade in the UAE pushed above AED 1trn for the first time in a statement provided by Sheikh Mohammed bin Rashid al Maktoum, vice president of the UAE and ruler of Dubai.
Foreign visitor numbers to Turkey hit 6.7mn in July, marking a 53% gain on July 2022, and surpassing pre-pandemic July 2019’s 6.6mn by 0.75%. Germany continued to contribute the most visitors, at 962,000, while Russian visitors declined -8.3% to 808,000. Ytd, visitor numbers are up 128% y/y. Meanwhile, production of automotives expanded 37.4% y/y in July, to 93,659 vehicles. Production over January to July was up 5% y/y.
Egypt’s prime minister said the country was in the “final-agreement stage” of talks with the IMF over a new support package though there has been no detail on how much Egypt will be seeking. Egypt last secured a USD 12bn loan in 2016 that included commitments to substantial economic reforms and in 2020 arranged a USD 5.2bn stand-by agreement and USD 2.8bn rapid financing agreement during the Covid-19 pandemic.

Today’s Economic Data and Events

Fixed Income

Markets were bereft of any substantial data points to start the week with Treasuries maintaining their downward trend from the rend of last week. Yields on the 2yr UST rose by 8bps to 3.3098% while the 10yr yield closed 4bps higher at 3.0146%. Moves were more substantial in European bonds as another threat to natural gas supply to the region heightens the risk of a substantial slowdown or recession. Yields on 10yr bunds rose almost 8bps to 1.3% while the 10yr gilt yield added 10bps to 2.5%.

The Euro once again fell below parity with the US dollar, hitting its lowest level in 20 years overnight. The pair closed at EURUSD 0.9943, down more than 0.9% after several days of large declines at the end of last week. Increasing risks to the supply of natural gas from Russia to Europe are darkening the economic outlook. The weakness in the Euro stretched into other markets with GBPUSD down 0.5% at 1.1767 and USDJPY up by almost 0.4% to 137.48.
In the commodity space, USDCAD rose a fourth day in a row, settling up 0.5% at 1.3056. Meanwhile AUDUSD managed to hold relatively steady at 0.6877 while NZDUSD fell 0.4% to 0.6168 even as central bank officials in New Zealand have talked up the prospect of even higher policy rates.

Equities

There was little in the way of data releases for stocks to take their lead from, so all eyes will be on the upcoming PMI survey results for Europe and any indication as to the level of commitment to rate hikes for some direction.
For the time being, growth concerns remain to the fore and equity markets took another tumble to start the week as the risk-off sentiment seen on Friday continued. In the US, all three benchmarks closed markedly lower with the Dow Jones, the S&P 500 and the NASDAQ losing -1.9%, -2.1% and -2.6% respectively. In Europe, the FTSE 100 was comparatively unscathed as it dropped just -0.2%, but the CAC dropped -1.8% and the DAX -2.3%.
Locally, the Tadawul eked out a 0.1% gain but the DFM (-0.3%) and the ADX (-0.4%) both closed lower.

Commodities

Oil prices oscillated sharply overnight as expectations that a resumption of the JCPOA may allow the return of Iranian barrels to the market was offset by comments from Saudi Arabia’s oil minister that OPEC+ may need to take steps to stabilize the market. After a sharp drop in the late session, Brent prices recovered and settled down by 0.25% to USD 96.48/b while WTI dropped by 0.6% to USD 90.23/b.
Prince Abdulaziz bin Salman, the oil minister of Saudi Arabia, said that futures and physical markets have “become increasingly more disconnected” with futures markets focused on the global recession narrative while physical markets are reflecting more apparent tightness. The volatility in oil markets at present will “strengthen the resolve” of OPEC+ to respond to market conditions, according to the minister.