Sheikh Mohamed bin Zayed Al Nahyan appointed as President of the UAE

Khatija Haque - Head of Research & Chief Economist
Published Date: 17 May 2022


  • Sheikh Mohamed bin Zayed Al Nahyan was appointed as President of the UAE in a unanimous decision by the Supreme Council on Saturday. He succeeds Sheikh Khalifa bin Zayed who passed away on Friday. 
  • Weaker than expected economic data in China saw a return to risk-off sentiment in global markets at the start of the week.  Industrial production, retail sales and fixed investment all came in below forecasts for April, with IP and retail sales contracting -2.9% y/y and -11.1% y/y respectively. The unemployment rate also increased to 6.1% in April from 5.8% in March, the highest level since February 2020. China’s Covid Zero policy led to lockdowns and restrictions in major cities last month, which weighed on both factory output and consumer spending. However, conditions appear to be improving this month, with Shanghai reporting no new Covid-19 infections for the third day in a row.
  • The empire manufacturing declined by 36 points in May to -11.6, indicating a contraction in the manufacturing sector in the state of New York for the second time in three months. The reading came in well below expectations, but the series is volatile. Both input and output prices increased sharply again in May but the rate of increase appears to have slowed from the prior month.
  • US consumer sentiment in May fell to the lowest level since 2011 as inflation erodes wage gains and interest rate hikes have pushed up borrowing costs. The recent decline in stock markets has likely also contributed to weaker consumer confidence. However, consumer spending has remained robust so far, and long-term inflation expectations remained unchanged from April at 3%.   
  • In the UK, BoE governor Andrew Bailey said higher food prices would be “apocalyptic” and disastrous for the poor and developing economies, urging governments to work on restoring supply of agricultural products from Ukraine. He noted that central bank policy could not have prevented the recent surge in inflation which was largely due to exogenous shocks, and that tighter monetary policy would eventually curb inflation but at a cost of higher unemployment and weaker activity.
  • Consumer inflation in Saudi Arabia accelerated 0.4% m/m and 2.3% y/y in April, up from 2.0% y/y in March. Food prices rose 1.7% m/m, the largest monthly increase since July 2020 when the VAT rate was tripled to 15% from 5%. On an annual basis, food prices are up 4.3% y/y in April. Housing and utility costs remain contained, up just 0.2% y/y. Transport costs rose 0.7% m/m in April but annual inflation is relatively low at 4.6% y/y. We expect CPI to average 3.0% this year, similar to 2021.
  • Saudi Arabia recorded a budget surplus of SAR 57.5bn in Q1 2022 as oil revenue rose 58% y/y while spending remained relatively disciplined. Total government revenue was up by more than one-third compared with Q1 2021, while spending grew 4% y/y. We expect the kingdom to record a budget surplus of 10.4% of GDP this year.

Today’s Economic Data and Events

10:00 UK ILO unemployment rate (Mar) forecast 3.8%

13:00 EC Q1 GDP (prelim) forecast 5.0% y/y

16:30 US retails sales (Apr) forecast 1.0% m/m

17:15 US industrial production (Apr) forecast 0.5% m/m

Fixed Income

  • US Treasuries opened the week on a slightly stronger footing as markets adopted a tentative risk-on position. Yields on the 2yr UST held to a narrow range, drifting lower by less than 1bp at the close to 2.5698%. On the 10yr, yields oscillated more substantially, ultimately pushing lower by around 4bps to 2.8822% at the end of trading. The 2s10s curve settled lower by almost 3bps at around 31bps.
  • European bond markets also closed slightly stronger at the start of the trading week with the 10yr bund yield lower by around 1bp to 0.932% and the 10yr gilt yield falling by a bit more than 1bps to 1.728%.
  • Emerging markets take the lead on central bank policy this week with decisions from Sri Lanka, the Philippines, South Africa and Egypt on May 19.


  • The dollar closed weaker against peer currencies with no major data catalyst to shift markets one way or the other. EURUSD closed up 0.2% at the start of the week to settle at 1.0434 while GBPUSD rallied a strong 0.46% to 1.2319. USDJPY closed nearly unchanged.
  • In commodity currencies, a strong upward pull in oil helped to strengthen the loonie against the dollar with USDCAD moving lower by 0.6%. AUDUSD also gained, adding 0.45% to 0.6971 while NZDUSD jumped 0.5% to 0.631.


  • e& (Etisalat Group) has bought a 9.8% stake in the UK’s Vodafone Group for USD 4.4bn as it seeks to diversify its holdings and “gain significant exposure to a world leader in connectivity and digital services”. The company said it seeks to develop opportunities for commercial partnerships with Vodafone in R&D, technological applications and procurement.
  • Tech stocks remained under pressure in the US at the start of the week as the NASDAQ slid a further -1.2% on Monday. The index is now down -25.5% ytd. The S&P 500 dropped -0.4% while the Dow Jones eked out a gain of 0.1%.
  • In Europe, the FTSE 100 added 0.6% while the CAC (-0.2%) and the DAX (-0.5%) both closed lower.
  • The Shanghai Composite lost -0.3% on Monday while the Nikkei gained 0.5%.


  • Oil prices extended their gains from the end of last week with Brent futures adding 2.4% to USD 114.22/b while WTI added more than 3.3% to USD 114.20. Prices are at their highest level since the end of March.
  • Metals markets were generally stronger with gold prices up 0.7% to USD 1,824/troy oz, helping to lift the rest of the precious metals complex. Aluminium added 1.6% to USD 2,832/tonne while copper and iron ore rose either side of 1%.  

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