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Monday, 14 June 2021

All is well in the US treasury market (for now at least)

Investors appear (for now) to be going along with the Fed’s temporary-inflation mantra as US treasuries recorded last week their best week in a year despite further evidence of rising inflation, according to the Financial Times. Traders piled into the treasury market last week leaving 10-year yields with their biggest weekly decline since June 2020 — even as new data showed inflation hitting its highest level since 2008.

It was only a couple of months ago that the US bond market saw a serious sell-off and yields spike as investors positioned for an end to the Federal Reserve’s covid bond-buying programme and — perhaps — a rise in interest rates. The theory was that the oncoming inflation would soon force central bankers to turn off the liquidity taps. Instead, central banks seem perfectly happy to let inflation rise if it means keeping the post-covid economic recovery on track.

And this sentiment doesn’t seem to have changed all that much, according to a BMO client survey last week, which showed that a record 71% of investors expect the next major move in yields will be upwards.

Down

EGX30

9,887

-0.9% (YTD: -8.1%)

None

USD (CBE)

Buy 15.60

Sell 15.70

None

USD at CIB

Buy 15.60

Sell 15.70

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

10,897

+0.9% (YTD: +25.4%)

Down

ADX

6,701

-0.2% (YTD: +32.8%)

None

DFM

2,842

-% (YTD: +14.1%)

Up

S&P 500

4,247

+0.2% (YTD: +13.1%)

Up

FTSE 100

7,134

+0.7% (YTD: +10.4%)

Up

Brent crude

USD 72.80

+0.2%

Up

Natural gas (Nymex)

USD 3.31

+0.5%

Down

Gold

USD 1,878.70

-0.1%

Up

BTC

USD 38,832

+7.9% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.9% at today’s close on turnover of EGP 1.24 bn (8.1% below the 90-day average). Local investors were net sellers. The index is down 8.8% YTD.

In the green: Eastern Company (+2.0%), Pioneers Holding (+1.6%) and Export Development Bank (+1.0%).

In the red: Orascom Financial Holding (-3.5%), MM Group (-3.3%) and Ezz Steel (-3.1%).

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