The USD is emerging as the safe haven of choice for global investors, with other usual safe havens like bonds and gold getting dragged amid the global rout that has hit stocks since the start of the US-Israel-Iran war. As the bonds and gold markets suffer, the Bloomberg USD Spot Index is heading for its strongest back-to-back rally in nearly a year.

This comes as fears of inflation have been stoked amid the spike in oil and gas prices, with Brent jumping over 8% on Tuesday to reach USD 85 / bbl for the first time since July 2024 and European gas prices jumping 36%.

A Bloomberg gauge of global bonds dropped 0.8% — the worst day since May — while yields on 10-year Treasuries climbed to 4.10%, up 16 bps from Friday. Meanwhile, Britain’s two-year gilt logged its sharpest two-day jump in nearly 18 months, and Japanese government bonds also fell.

Rate cut dreams? Parked for now. Markets now see just a 25% chance of a Bank of England cut this month, down from 75% last week, while money markets have trimmed expected Fed easing this year to 37 bps, down from 60 bps on Friday. Traders have even started penciling in a small chance of an European Central Bank (ECB) hike by year-end.

Policymakers aren’t dismissing the risk: ECB Chief Economist Philip Lane warned that a prolonged conflict could trigger a substantial spike in inflation and dent growth, while Amundi’s Monica Defend said geopolitics is reasserting itself as a recurring macro force.

And gold — which typically acts as a hedge against turmoil — dipped 5.6% to USD 5.03k an ounce on Tuesday, weighed down by a stronger greenback and inflation concerns. Gold had jumped as much as 2.6% to above USD 5.4k a troy ounce earlier in the week, the Financial Times reports.

MARKETS THIS MORNING-

It’s another day with Asia-Pacific markets opening in the red as uncertainty triggered by the escalating regional war keeps investors on edge. The Kospi is down over 8% and the Nikkei is down 3.6%. For the third morning running, Wall Street futures are in the red.

TASI

10,566

+0.7% (YTD: +0.7%)

MSCI Tadawul 30

1,437

+1.0% (YTD: +3.6%)

NomuC

22,297

-1.1% (YTD: -4.3%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.25% repo

3.75% reverse repo

EGX30

46,726

-2.0% (YTD: +11.7%)

ADX

10,454

-1.3% (YTD: +4.6%)

DFM

6,504

-1.8% (YTD: +7.6%)

S&P 500

6,817

-0.9% (YTD: -0.4%)

FTSE 100

10,484

-2.8% (YTD: +5.6%)

Euro Stoxx 50

5,772

-3.6% (YTD: -0.3%)

Brent crude

USD 82.12

+5.6%

Natural gas (Nymex)

USD 3.05

+3.2%

Gold

USD 5,124

-3.5%

BTC

USD 68,277

-1.6% (YTD: -22.1%)

Sukuk/bond market index

919.83

-0.4% (YTD: +0.1%)

S&P MENA Bond & Sukuk

152.96

-0.6% (YTD: +0.7%)

VIX (Volatility Index)

23.65

+10.3% (YTD: +57.3%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.7% yesterday on turnover of SAR 5.7 bn. The index is up 0.7% YTD.

In the green: Yansab (+9.9%), Gasco (+9.8%), and EIC (+5.6%).

In the red: SHL (-8.9%), Amak (-8.1%), and Elm (-7.3%).

THE CLOSING BELL: NOMU-

The NomuC fell 1.1% yesterday on turnover of SAR 15.6 mn. The index is down 4.3% YTD.

In the green: Tibbiyah (+9.9%), Sahat Almajd (+9.2%), and Jamjoom Fashion (+7.7%).

In the red: TAM Development (-16.8%), Watani Steel (-10.7%), and Alashghal Almoysra (-9.3%).

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