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Published Date: 24 June 2019
While risk assets received a boost from the Fed’s more dovish tone at the June FOMC meeting, rising geopolitical tensions, uncertainty around US-China trade discussions and a continued softening in economic data globally are likely to weigh on markets over the summer.
Global macro: Central banks are adopting more dovish stances amidst rising concerns over trade, and to some extent pitching themselves against each other in what might eventually turn into a rerun of the fabled currency wars.
GCC macro: We have revised down our 2019 GDP growth forecast for the UAE to 2.0% from 3.1% previously. Dubai’s economy will likely remain the country’s main engine of non-oil growth. We expect GDP growth to accelerate to 2.6% in 2020.
MENA macro: The upside surprise to Egyptian inflation in May reaffirms our view that the Central Bank of Egypt (CBE) will keep its benchmark interest rates on hold over its next several MPC meetings (July, August, September).
Interest Rates: Government bonds rallied on the back of accommodative bias being adopted by major central banks.
Credit Markets: Credit spreads on GCC bonds remain range-bound amid rising geopolitical concerns.
Currencies: The dollar has gained ground over the course of the month, benefiting from safe haven bids as trade tensions continue to escalate.
Equities: As we approach the second half of 2019, global equities appears to be caught in a tug-of-war between the adrenalin of easy monetary policy across economies and the weight of slowing global economic growth along with rising geopolitical risks.
Commodities: Industrial metals have been among the biggest casualties of the US-China trade war. Even as some markets face significant supply risks, lower expectations for demand are dragging prices lower and we are revisiting several of our price assumptions.
Green bond market has room to expand in MENA
Monetary Policy Review
Updates to our Treasury and FX views
Oil institutions to set tone for markets