21 April 2022
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UAE to launch treasury market


By Emirates NBD Research

  • The UAE Ministry of Finance said the government will soon sell Treasury bonds denominated in local currency for the first time, seeking to raise AED 9bn dirhams with eight auctions between May and the end of the year. The T-bonds will be issued with varying tenors of two, three and five years in an initial phase and a 10-year tenor in the medium term. Auctions would also be held in June, August and October for the same tenors, the schedule showed. A proposed schedule of auctions on the finance ministry's website showed the first penciled in for May for two-and three-year paper. Two-year notes, as well as well as five-year bonds, would also be offered in September. Three- and five-year bonds would be sold in December, according to the proposed timeline. This follows on the cabinet approving in January a debt strategy to develop a local currency bond market.
  • According to data released by STR, hotel occupancy levels in Dubai reached 91.7% in March, the highest level in 15 years, while revenue per available room (RevPAR) stood at AED 817.9 (highest since December 2015), and average daily rates hit AED891.46. The strong figures were driven by driven by the final weeks of Expo 2020, which recorded over 24mn visits during the six-month-long event.
  • Canada's annual inflation rate accelerated faster than expected in March, with the headline rate hitting 6.7% y/y in March, well above analyst expectations of 6.1% y/y and a full percentage point higher than in February, this marks a 31-year high.  It was the 12th consecutive month above the central bank's 1-3% control range and just short of the 6.9% y/y hit in January 1991. The higher-than-expected number increases the likelihood of the Bank of Canada making another large rate hike when it next meets in June. The bank raised rates by half a percentage point last week and said more increases were coming to fight inflation. Canadian gasoline prices were up 11.8% m/m in March and 39.8% y/y as global oil prices surged on the Ukraine conflict. Food prices jumped 8.7% y/y, with pasta and cereal products up on wheat futures, Statscan said. The CPI common measure, which the Bank of Canada says is the best gauge of the economy's performance, rose to 2.8% y/y from a revised 2.7% y/y in February. Statscan noted continued price pressures on housing and said a very tight labor market was driving wage inflation.
  • San Francisco Federal Reserve President Mary Daly yesterday said she supports getting the US central bank's benchmark overnight interest rate up to about 2.5% by the end of the year, joining broad consensus at the Fed that it needs to ramp up its fight against skyrocketing inflation. She said that accounting for the risks of being too fast or too slow, she sees an expeditious march to neutral by the end of the year as a prudent path.  Noting the current uncertainty over the war in Europe and the pandemic, Daly cautioned against going too fast, calling for a smooth and methodical approach to policy that contrasts with the even sharper rate hike path that a couple of her colleagues have advocated. 

Today’s Economic Data and Events

13:00 EU CPI (YoY) (Mar) Forecast 7.5%                 

16:30 US Initial Jobless Claims Forecast 180K

16:30 US Philadelphia Fed Manufacturing Index (Apr) Forecast 21.0                         

19:00 US Fed Chair Powell Speaks                                                            

20:30 GB BoE Gov Bailey Speaks                                                               

21:00 US Fed Chair Powell Speaks                                                            

21:00 EU ECB President Lagarde Speaks 

Fixed Income

  • Short-end UST closed slightly stronger on the day as yields on the 2yr UST held around a narrow range either side of 2.6%. Yields fell almost 2bps to settle at 2.5753% while on the longer-end USTs rallied as the current yield level and small positive real rates start to bring back macro investors. The 10yr UST yields dipped 10bps to 2.832%.
  • European bond markets also caught a rally with gains across the eurozone markets as well as the UK. Yields on the 10yr bund dipped 5bps to 0.851% while the 10yr gilt yield fell 5bps to 1.913%. Emerging market bonds generally tilted positive though gains were limited. South African 10yr bonds were marginally higher while Indian 10yr yields dropped less than 1bps to 7.104%.
  • Islamic Development Bank is pricing its USD 5yr sukuk at 60bps over SOFR midswaps. The size of the issue will likely be determined by the order book.


  • In currency markets the yen managed to snap its recent steep losing streak with USDJPY closing down 0.8% to 127.86. Policymakers in Japan have become more vocal about the rapid descent of the currency even if there is a general policy that a weaker yen benefits the economy and the Bank of Japan is maintaining a highly accommodative stance. The move in the yen filtered across currency markets more generally with EURUSD adding 0.6% overnight, its second day in a row of gains, to close at 108.53 while GBPUSD managed to rise 0.5% to 1.3068.
  • Commodity currencies also rallied strongly with USDCAD down 0.9% to 1.2499 while AUDUSD added 1% to 0.7450 and NZDUSD gained more than 1% to 0.6807.


  • US markets closed mixed overnight with the Dow Jones adding 0.7% while the NASDAQ was off heavily, down more than 1.2% and the S&P held steady. European markets generally closed in the green with the FTSE gaining 0.37% and the DAX up almost 1.5%.
  • In Asian markets in early trade the Nikkei has gained 1.2% while the Hang Seng is down 0.9% and the CSI is off by 0.6%.


  • Oil prices settled mixed overnight with Brent futures down slightly at USD 106.80/b and WTI up marginally at USD 102.75/b. By the standards of recent weeks, however, the moves were relatively negligible. In the short term, focus remains on China’s strict measures to control Covid1-9 and the negative implications for demand as the disruption to supply caused by the war in Ukraine is increasingly discounted in the market. A new catalyst, such as an official embargo from the EU on Russian oil, would set up a new substantial move higher.                 
  • Data from the EIA showed a large drop in US oil inventories last week with 8m bbl coming out of commercial stocks and almost 5m bbl from strategic petroleum reserves. Total petroleum inventories fell by nearly 13m bbl last week. US oil production ticked up by 100k b/d to 11.9m b/d while product supplied was relatively stable.

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Written By


Emirates NBD Research Research Analyst

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