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Middle East Daily
SOOJIN KIM
Research Analyst
DIFC Branch – Dubai
T: +44(4)387 5031
E: soojin.kim@ae.mufg.jp
MUFG Bank, Ltd. and MUFG Securities plc
A member of MUFG, a global financial group
Middle East Daily
COMMODITIES / ENERGY
Oil holds gains as market balance bearish fundamentals with geopolitical risks. Oil prices steadied after a three-day rally, with Brent above USD67/b and WTI near USD64/b, as investors weighed President Trump’s latest remarks on Russia and potential punitive measures tied to the Ukraine war. A brief price spike followed Trump’s social media post questioning Russia’s incursion into Polish airspace, which prompted short-covering, while his conditional threat of tariffs on India and China added to uncertainty. The EU also vowed to “significantly” ramp up sanctions, calling the airspace violation a serious escalation. Still, fundamentals remain bearish, with US crude inventories rising by 3.9 million barrels last week and a widely anticipated glut expected later this year. Going forward, market dynamics will likely hinge on whether supply growth materialises faster than demand recovery, while geopolitical tensions continue to provide intermittent support for prices.
Gold holds near record as weak US data fuels rate-cut expectations. Gold steadied around USD3,642/oz, just below its recent peak, after a surprise decline in US producer prices bolstered expectations that the Fed will cut rates next week, with traders pricing in 25bps move and potentially two more by year-end. The drop in prices comes alongside soft labour market data, reinforcing the case for policy easing that typically supports non-yielding assets like gold. Gold has already surged 40% this year, driven by strong central bank buying, geopolitical risks, and uncertainty over US tariffs, with ETF inflows adding further momentum. Political tensions around the Fed’s independence remain in focus as President Trump continues efforts to remove Governor Lisa Cook, further enhancing gold’s appeal as a haven.
MIDDLE EAST - CREDIT TRADING
End of day comment – 10 September 2025. A bit of a mixed day. Flows were skewed to selling but that was in part influenced by new issuance trading. Still the market feels like running into a bit of yield sellers in some names especially in the IG sector. What is still in demand though are higher beta credits, today SHJGOV 50 lit up trading +0.875pt/-7bp. Names like Oman and MOROC also remained well bid. Post PPI number and the UST rally IG names though started to lag in spread terms. Seen a mix of RM and street selling in the main sovereign. After the Israel attack in Qatar yesterday the activity in Qatar slowed down materially, this was the lowest volume day in the sovereign for a while as the market seems to consider what comes next, the sovereign curve closed about +2bp. ADGB also lacked traction post PPI with the curve 1/2bp wider mostly on the UST move. High beta names squeezed hard lately reflecting the risk on mood, it has gotten to the point though were the outperformance to IG names looks a little stretched. IF CPI clears the rate cut outlook I think IG names will find traction soon, meanwhile the Saudi complex continues its new issue spree.
MIDDLE EAST - MACRO / MARKETS
Egypt’s inflation slows as pound rebounds, easing price pressure. Egypt’s annual inflation eased to 12% y/y in August, down from 13.9% y/y in July and marking its lowest level since March 2022, as a strengthening pound helped reduce costs in the import-reliant economy. The currency, which lost nearly 40% in March 2024, has since rebounded to around 48 per dollar, its strongest in 14 months, supported by foreign inflows, tourism, and exports. Monthly prices rose 0.4%, with food inflation slowing to 2.1%, while core inflation cooled to 10.7%. the moderation, less than half the record 38% peak in September 2023, comes as authorities balance subsidy cuts with protecting vulnerable groups, backed by last year’s USD57bn UAE-IMF bailout. With inflation pressures easing and the central bank already cutting rate by 525bps in 2025, further monetary easing remain likely, though potential fuel price hikes could temper moves. Policymakers are targeting 7% inflation ±2% by late 2026, suggesting a continued disinflationary path.
ADGM reports strong growth in H1 2025. Abu Dhabi Global Market (ADGM), the UAE’s capital’s financial free zone, posted robust growth in the first half of 2025, with the number of active companies rising 42% y/y to nearly 3,000, reflecting Abu Dhabi’s growing appeal as a regional and global financial hub. Assets under management also expanded by a similar margin, supported by strong inflows from global funds and asset managers seeking proximity to Abu Dhabi’s sovereign wealth ecosystem and favourable regulatory framework. The expansion underscores ADGM’s role in advancing the UAE’s diversification strategy, positioning the emirate as a competitive destination for international capital. Going forward, the hub’s momentum will likely be bolstered by continued reforms, fintech innovation, and deepening links to global markets, reinforcing its status as one of the fastest-growing financial centres in the MENAT region.
