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Thursday, 26 May 2022

US interest rates could be 100 bps higher by July

Two more 50-bps Fed rate hikes coming up? That’s what the newly-released minutes (pdf) from the Federal Reserve’s May meeting suggest. In its 3-4 May meeting, the central bank went ahead with its biggest hike since 2000 raising rates by 50 bps in a bid to quell soaring inflation. Minutes from the meeting released yesterday shows that officials expected to have to deliberately slow economic growth in order to combat inflation. “Most participants judged that 50-bps increases in the target range would likely be appropriate at the next couple of meetings,” the minutes said. “A restrictive stance of policy may well become appropriate depending on the evolving economic outlook.” The minutes also showed members agreeing to a plan starting 1 June to start unwinding the central bank’s USD 9 tn of treasuries and mortgage bonds on its balance sheet.

ALSO IN PLANET FINANCE-

  • Russia is now officially on the brink of its first debt default since the 1990s, after the US officially decided to close a loophole that has allowed Moscow to continue paying coupons on its foreign bonds despite sweeping sanctions. (US Treasury)
  • The Chinese economy could contract this quarter as the country struggles with covid-19 lockdowns that have shuttered some of the country’s most important commercial hubs, Prime Minister Li Keqiang warned yesterday. (FT)
  • Aramco eyes Valvoline unit: Saudi oil giant Aramco has shown interest in buying motor oil and lubricant producer Valvoline’s retail-services unit, people familiar with the matter said. (Wall Street Journal)
  • Turkey drafts bill to regulate crypto: Turkey is drafting legislation to impose tighter regulations on the crypto market, sources say. The proposals could reportedly include requiring global cryptocurrency platforms to open tax-able branches in Turkey. (Bloomberg)

Down

EGX30

10,247

-1.6% (YTD: -14.2%)

Down

USD (CBE)

Buy 18.55

Sell 18.63

Down

USD at CIB

Buy 18.57

Sell 18.63

None

Interest rates CBE

11.25% deposit

12.25% lending

Up

Tadawul

12,589

+2.3% (YTD: +11.6%)

Up

ADX

9,559

+0.9% (YTD: +12.6%)

None

DFM

3,258

0.0% (YTD: +1.9%)

Up

S&P 500

3,979

+1.0% (YTD: -16.5%)

Up

FTSE 100

7,523

+0.5% (YTD: +1.9%)

Up

Euro Stoxx 50

3,677

+0.8% (YTD: -14.5%)

Up

Brent crude

USD 114.50

+0.8%

Up

Natural gas (Nymex)

USD 8.97

+2.0%

Down

Gold

USD 1,852.50

-1.0%

Up

BTC

USD 29,766

+0.7% (YTD: -35.6%)

THE CLOSING BELL-

The EGX30 fell 1.6% at yesterday’s close on turnover of EGP 694 mn (18.3% below the 90-day average). Arab investors were net buyers. The index is down 14.2% YTD.

In the red: GB Auto (-10.7%), MM Group (-7.9%) and Ibn Sina Pharma (-6.5%).

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