Investors are closely watching the Federal Reserve’s preferred inflation gauge — the personal consumption expenditures index — set to be released this week. The data could reinforce or challenge expectations for a rate cut later this year, the Financial Times writes. While the index is expected to tick up 0.3% m-o-m in January, slightly above December’s 0.2%, the annual rate is forecasted to dip to 2.6% from 2.8%, according to a Reuters poll.

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The market is already jittery after January’s hotter-than-expected consumer price index, which saw core inflation rise to 3.3%, surpassing forecasts of 3.1%. The inflation surprise reshaped rate cut expectations, with futures traders now pricing in a quarter-point cut by September, and a 70% chance of another cut before year-end.

The risk: Inflation could prove stickier than expected. “Despite our expectation that inflation will slow solidly over the next couple of months, we feel the risks are skewed to the upside of our forecast over the next year or so — particularly from current and proposed administration policies,” UBS economist Alan Detmeister said.

Policymakers are also signaling caution: Atlanta Fed President Raphael Bostic flagged the complexity of trade, immigration, and regulatory shifts, calling them “crosscurrents” that complicate decision-making. Meanwhile, St. Louis Fed President Alberto Musalem warned that inflation could remain high even as economic growth slows, reinforcing concerns that the Fed’s “modestly restrictive” stance on interest rates could stick around longer than markets anticipate.

The real test: The Fed’s inflation target remains at 2%, but the path back to that level is uncertain. While investors are penciling in rate cuts by September, some economists argue the Fed could stay put if price pressures persist. “This is no time for complacency,” Bostic said.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning — the Shanghai Composite is down 0.2% and the Kospi is down 0.8%, meanwhile the Hang Seng is looking at gains of 0.2%.

EGX30

31,010

+0.3% (YTD: +4.3%)

USD (CBE)

Buy 50.51

Sell 50.64

USD (CIB)

Buy 50.52

Sell 50.62

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,388

+0.6% (YTD: +2.9%)

ADX

9,618

0.0% (YTD: +2.1%)

DFM

5,359

-0.4% (YTD: +3.9%)

S&P 500

6,013

-1.7% (YTD: +2.2%)

FTSE 100

8,659

0.0% (YTD: +6.0%)

Euro Stoxx 50

5,475

+0.3% (YTD: +11.8%)

Brent crude

USD 74.43

-2.7%

Natural gas (Nymex)

USD 4.23

+2.0%

Gold

USD 2,953

-0.1%

BTC

USD 95,660

-1.0% (YTD: +2.2%)

THE CLOSING BELL-

The EGX30 rose 0.3% at yesterday’s close on turnover of EGP 3.4 bn (6.9% below the 90-day average). Local investors were the sole net buyers. The index is up 4.3% YTD.

In the green: Juhayna (+5.9%), GB Corp (+4.0%), and EgyptAlum (+3.4%).

In the red: Egypt Kuwait Holding (-2.6%), Palm Hills Development (-1.7%), and Oriental Weavers (-1.2%).

CORPORATE ACTIONS-

#1- Egypt Kuwait Holding’s board approved a dividend distribution of 19% of the company’s issued and paid-up capital for its 2024 earnings, amounting to some USD 53.5 mn, according to an EGX disclosure (pdf).

#2- QNB’s general assembly approved paying out a dividend of EGP 1.5 per share on its 2024 earnings, the bank said in a disclosure (pdf).

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