The great 2023 global bond rally goes kaput: The rally in the global bond market that marked the first few weeks of the year has gone into reverse as stubborn inflation and a resilient US labor market reverse cause investors to rethink their assumptions that central banks are almost done raising interest rates, the Financial Times reports.

Riskier debt is bearing the brunt: Junk corporate bond funds have seen outflows of USD 7 bn so far this month, according to fund tracker EPFR, following net inflows of USD 3.9 bn in January. Meanwhile, emerging market bonds last week saw their largest outflows since October, a reversal from record-high inflows in January.

It’s all about interest rates: Futures markets are now expecting the Federal Reserve to continue to hike rates to 5.4% by July in a bid to curb sticky inflation, replacing optimism that the central bank would end its tightening cycle early in the year. The Fed trimmed the pace of its rate hikes earlier this month, raising the key rate by 25 bps to a target range of 4.5-4.75%, down from 50 bps in December.

MEANWHILE- Emerging-market assets are coming under pressure from a resurgent greenback: Rising uncertainty about the direction of interest rates has fuelled a USD rebound over the past four weeks and this is causing investors to rethink their previous bullish calls on emerging-market assets, according to Bloomberg. The MSCI gauge of EM currencies has almost erased all 2023 gains in February due to USD strength, leading major funds to drop their risk-on positioning on EM currencies.

What they said: “We are concerned on a more tactical basis that EMFX has moved too far too fast,” said a strategist at Abrdn. “The Federal Reserve is not yet done hiking, there remains much uncertainty around the inflation outlook, and we fully expect a US/global recession in the next six to 12 months.”

	EGX30	17,213	+1.2% (YTD: +17.9%)
	USD (CBE)	Buy 30.58	Sell 30.68
	USD at CIB	Buy 30.58	Sell 30.68
	Interest rates CBE	16.25% deposit	17.25% lending
	Tadawul	10,052	-1.0% (YTD: -4.1%)
	ADX	9,859	+0.2% (YTD: -3.5%)
	DFM	3,419	+0.2% (YTD: +2.5%)
	S&P 500	3,970	-1.1% (YTD: +3.4%)
	FTSE 100	7,879	-0.4% (YTD: +5.7%)
	Euro Stoxx 50	4,179	-1.9% (YTD: +10.2%)
	Brent crude	USD 83.16	+1.2%
	Natural gas (Nymex)	USD 2.55	+4.8%
	Gold	USD 1,817.10	-0.5%
	BTC	USD 23,562	+2.7% (YTD: +43.1%)

THE CLOSING BELL-

The EGX30 rose 1.2% at yesterday’s close on turnover of EGP 1.49 bn (25% below the 90-day average). Foreign investors were net sellers. The index is up 17.9% YTD.

In the green: Egypt Kuwait Holding- EGP (+4.3%), Telecom Egypt (+4.2%) and Juhayna (+3.0%).

In the red: Taleem Management Services (-2.5%), Rameda Pharma (-0.8%) and Fawry (-0.5%).

Asian markets are mixed this morning amid selling pressure after Wall Street logged last week its worst week of the year so far. Benchmark indexes in Australia, Japan, and Korea were down in early trading, while the Hang Seng and Shanghai were seesawing between red and green. Futures suggest a mixed open for European markets later this morning. Likely opening up: EuroStoxx 50, FTSE 100, DAX 30. Set at dispatch time to open down: CAC 40, Athens 20. North American shares look largely set to post gains at the opening bell.