US consumer prices fall for the first time since May 2020: US inflation slowed to its lowest level in a year in December, in the latest sign that a surge in prices that has forced the Federal Reserve to aggressively raise interest rates is abating. The consumer price index fell to 6.5% last month from 7.1% in November, largely on the back of falling gas prices, according to figures (pdf) released Friday by the Bureau of Labor Statistics. On a monthly basis, prices fell for the first time since May 2020, declining 0.1% during the month.

The slowdown will continue to stoke hopes for an end to the Federal Reserve’s aggressive tightening cycle: Bloomberg economist Anna Wong thinks that the report will prompt the US central bank to again slow the pace of rate hikes in its coming meeting. “A mostly favorable December CPI report gives the Fed room to further downshift the pace of rate hikes to 25 bps at the 31 January-1 February meeting. We expect the Fed funds rate to peak at 5% in March and stay at that level for the rest of the year.” The central bank raised rates by 50 bps at its final meeting of 2022, breaking a run of four consecutive jumbo 75-bps hikes and bringing the target range of the federal funds rate to 4.25-4.5%.

Optimism that the worst is over is good news for EM debt: Signs that inflation may have peaked in the US — and that monetary tightening could ease — are prompting investors to pile into emerging-market sovereign debt following a choppy year. EM sovereign debt has seen more than USD 40 bn in inflows so far this year, making it one of the busiest starts to a year on record, according to Bank of America, the Financial Times reports. The bond binge comes as bond prices rebound from heavy losses last year, with the JPMorgan gauge for EM foreign currency debt now up 1.7% so far in January, compared with a 17.8% fall last year.

Is Egypt jumping on the sovereign bond bandwagon? Egypt was not among the issuers so far this month, though one fund manager tells Reuters that the country will need to issue debt in the medium-term but is likely waiting for better market conditions. Indicated yields are currently in the double-digits, but Egypt will likely wait until they drop to the 8-9% range, they said.

FROM THE REGION-

• Saudi industrial oils giant Petromin is dusting off plans to IPO in Riyadh, in a share sale that could fetch as much as USD 1 bn. (Bloomberg)
• UAE tech firm Astra Tech has purchased voice-calling app Botim for an undisclosed amount, an acquisition that brings AT closer to creating a super-app and makes it one of the region’s biggest communications tech platforms. (Bloomberg)
• Credit Suisse plans to lay off 10% of its European investment bankers this year in another wave of job cuts for the crisis-hit firm amid leaner times for the sector. (FT)

	EGX30	15,551	+0.2% (YTD: +6.5%)
	USD (CBE)	Buy 29.53	Sell 29.62
	USD at CIB	Buy 29.50	Sell 29.60
	Interest rates CBE	16.25% deposit	17.25% lending
	Tadawul	10,744	+1.2% (YTD: +2.5%)
	ADX	10,211	+0.6% (YTD: 0.0%)
	DFM	3,324	+0.3% (YTD: -0.4%)
	S&P 500	3,999	+0.4% (YTD: +4.2%)
	FTSE 100	7,844	+0.6% (YTD: +5.3%)
	Euro Stoxx 50	4,151	+0.6% (YTD: +9.4%)
	Brent crude	USD 85.28	+1.5%
	Natural gas (Nymex)	USD 3.42	-7.5%
	Gold	USD 1,921.70	+1.2%
	BTC	USD 20,955	+5.2% (YTD: +26.3%)

THE CLOSING BELL-

The EGX30 rose 0.2% at Thursday’s close on turnover of EGP 2.59 bn (55.9% above the 90-day average). Local investors were net buyers. The index is up 6.53% YTD.

In the green: Heliopolis Housing and Development (+10.6%), Alexandria Containers and Cargo Handling (+4.9%) and AMOC (+4.5%).

In the red: Cleopatra Hospitals (-3.2%), Mopco (-2.7%) and Credit Agricole Egypt (-2.5%).