Plenty of macro overhang, but the engine room is still humming

Halfway through the week, there’s no shortage of headline risk in the region. Tensions flared up again as the UAE accused Iran of attacking one of its tankers attempting to pass through the Strait of Hormuz on Monday, shortly after Iran said two missiles hit a US vessel, though US Central Command denied any strike. Residents in the UAE also began receiving public safety warnings again as Iran fired missiles into the country, seemingly targeting every oil export route the UAE has.

Meanwhile, Riyadh just confirmed what was already foreshadowed, with its 1Q 2026 fiscal deficit widening to its highest level since 2018 at SAR 125.7 bn (c. 35.5 bn). That figure is dangerously close to the USD 44 bn the government has penciled in for the entire year, thanks to a dip in oil revenues and an uptick in government spending.

AND- The latest PMI figures across the Gulf, Egypt, and Turkey mostly landed on the disappointing side. Output, new orders, and hiring all lost momentum last month, signaling mounting cost pressures and slowing demand.

Look past the macro overhang, though, and the deal pipeline paints a different picture. For the second issue in a row, our Markets + Deals column points to a rather busy time for capital markets. Bookrunners are working through a healthy slate of IPOs, transactions are being priced, and M&A is — if anything — picking up pace. –Patrick and Salma