Daily Treasury Market Update

FX
FX Rates (Mid)
USD
QAR
USD
-
3.64
EUR
1.224
4.458
JPY
119.55
0.030
GBP
1.564
5.697
CHF
0.983
3.706
AUD
0.816
2.971
INR
63.20
0.058
TRY
2.317
1.572
ZAR
11.58
0.314
BRL
2.660
1.369
QIBOR RATES
Duration
QIBOR
Duration
QIBOR
Overnight
0.80
3 Months
1.06
1 Week
0.85
6 Months
1.23
1 Month
0.90
9 Months
1.34
2 Months
0.99
1 Year
1.44
US RATES
US Rates
Treasuries
Libor
Swaps
3M
0.03
0.25
-
6M
0.11
0.35
-
5Y
1.63
-
1.76
10Y
2.15
-
2.28
Index Level
1 Day
%
QE Index
12030
7.58%
Saudi Arabia (TASI)
8525
2.46%
UAE (ADX)
4517
3.47%
UAE (DFM)
3765
9.88%
Kuwait (KSE)
6433
3.25%
Oman (MSM)
5998
5.52%
Bahrain (BAX)
1410
1.43%
Dow Jones
17805
0.15%
S&P 500
2071
0.46%
Nasdaq
4765
0.36%
FTSE
6545
1.23%
Euro Stoxx 50
3141
-0.40%
Nikkei
17618
-0.02%
Hang Seng
23387
1.17%
Nifty India
8245
0.24%
Borsa Istanbul
83574
0.42%
GLOBAL MARKETS
Indices
GCC
GLOBAL
COMMODITIES
Crude Oil
57.80
1.17%
Natural Gas
3.32
-4.16%
1198
0.19%
Period
Survey
Prior
Nov
0.25
0.14
Nov
5.20M
5.26M
Nov
-1.10%
1.50%
Gold
US ECONOMIC DATA
Time
Event
Chicago Fed Nat
16:30 Activity Index
Existing Home
18:00 Sales
Existing Home
18:00 Sales MoM
TOP NEWS
 The extra yield on 30-year Treasuries over five-year notes shrank to the least in almost six years as
the Federal Reserve prepares to raise interest rates in 2015 while falling commodity prices drive
down the outlook for inflation, a Bloomberg news article reported. The 10-year yield was near the
highest in about eight years over Group-of-Seven peers securities after the Fed said last week it will
be “patient” on the timing of the first rate increase since 2006, replacing a pledge to keep
borrowing costs low for a “considerable time.” The spread of 30-year yields over five-year ones was
110 basis points, the narrowest since January 2009.
 Asian stocks rose, with the regional index headed for its steepest three-day advance in almost two
months as crude oil jumps. Japanese bonds extended gains while New Zealand’s dollar dropped. Oil
blend settled at $59.27 Dec. 18, the lowest close since May 2009 and is still down 44% this year.
West Texas Intermediate crude gained 1.1% today to $57.73 per barrel after soaring 4.5% at the
end of last week.
 Oil producers outside of OPEC should cut their “irresponsible” output with excess supplies harming
the market, the United Arab Emirates energy minister said. The oil market is oversupplied by 2
million barrels a day, Mohammed Al Sada, Qatar’s energy minister, said in an interview on the
sidelines of a conference in Abu Dhabi yesterday. The Organization of Petroleum Exporting
Countries has produced about 30 million barrels a day since January 2013 while global output
climbed more than 2 million barrels a day to 93.6 million barrels, according to data compiled by
Bloomberg.

The campaign of Tunisian presidential candidate Beji Caid Essebsi said the 88-year-old
politician won the runoff vote against incumbent Moncef Marzouki in a race meant to cap the
country’s transition to democracy.

Saudi Arabia, the world’s largest oil exporter, is confident that crude prices will rebound with global
economic growth boosting demand. Prices will recover from a slump due to a glut created by a lack
of cooperation from producers outside the Organization of Petroleum Exporting Countries, Saudi
Arabia Oil Minister Ali Al-Naimi said at a conference in Abu Dhabi yesterday. Al-Naimi ended his
speech showing the confidence as he jumped off the stage and smiled. Brent oil tumbled into a bear
market this year as the U.S. pumped the most oil in more than three decades and economic growth
slowed from China to Germany. The increase in global crude demand was about 700,000 barrels a
day this year, below the projected 1.2 million barrels a day, Al-Naimi said.
 Dubai’s stocks entered a bull market in the biggest two-day gain in the gauge’s history as oil
rebounded and global equities rallied. Qatar’s main index also surged. The DFM General Index
climbed 9.9 percent to 3,765.35 at the close, advancing 24 percent since Dec. 17. The gauge
entered a bear market less than two weeks ago as it plummeted 22 percent from a peak in
September. Emaar Properties PJSC led today's gains with a 14 percent increase. Qatar’s QE Index
rallied 7.6 percent, the most in more than five years. Abu Dhabi’s ADX General Index added 3.5
percent.
 Joint venture between Qatar’s Nakilat and Dutch shipbuilder Damen to build 4 tugboats, 3 mooring
vessels, 4 pilot boats at shipyard in Qatar, Nakilat says in statement. Boats to be completed in 2016.
 Moody's Investors Service says that Qatar's (Aa2 stable) robust balance sheet and vast hydrocarbon
reserves underpin the sovereign's credit profile. The rating agency also notes that under a downside
scenario a prolonged period of low oil prices would impact natural gas prices and erode the
government's fiscal position, but Qatar's prudent budgeting and a relatively low debt burden
somewhat mitigate these risks.
 According to a report by Qatar National Bank (QNB), Qatar's public debt registered a decline to 32
percent of the Gross Domestic Product (GDP) in 2013, The Peninsula Qatar reported. Qatar's
current account surplus, while still large at an estimated 27.6 percent of GDP in 2014, is projected
to narrow to 21.2 percent of GDP in 2015 and 16.6 percent GDP in 2016 due to the current fall in oil
prices as well as a decline in the country's exports. The report indicated that despite a projected
decline in exports, the Barzan facility is expected to provide some increase in exports of products
associated with gas production such as LPG and petrochemicals, while imports, on the other hand,
are expected to continue increasing due to the growth in population, and the materials and services
needed for the multiple developments projects planned in the country. Meanwhile, Qatar's
accumulation of foreign exchange reserves is likely to slow after the country's international reserves
increased to a record high of USD45.3 billion in October 2014, which is equivalent to more than
eight months of import cover, while its budget surplus is also forecasted to decline from an
expected 10.8 percent of GDP in 2014 to 8.0 percent and 5.0 percent of GDP in 2015 and 2016,
respectively.
FX COMMENTARY
The Euro probed fresh two-year lows in a subdued start to a holiday-shortened week, extending a multimonth trend of weakness against the Dollar that many traders say will remain intact in the new year.
Speculation is high that the European Central Bank (ECB) will be forced to expand its asset-buying
program to include sovereign debt in early 2015, at a time when the Federal Reserve is preparing to do
the opposite and lift interest rates. The common currency has fallen about 11 percent so far this year. It
last traded at $1.2230, having touched $1.2220 early in the session, a low not seen since August 2012.
ECB governing council member Luc Coene said in a newspaper interview on Saturday that the bank
should start buying government bonds to tackle poor investor confidence and low inflation in the Euro
Zone. His comments came as Vice President Vitor Constancio reiterated that the bank would, in early
2015, assess the effectiveness of measures it had already taken. Constancio said the ECB must act if
inflation was too low to maintain its credibility and would need to use channels it had not tried before.
That would provide a catalyst for further Euro/Dollar depreciation next year, adding the recent break
lower has opened up targets around 1.2100 and 1.2040. In addition, the currency was dogged by
uncertainties on Greece, which could face an early election if its parliament fails to elect a president with
a three-fifths majority. Against the Yen, the greenback bought 119.43, climbing back towards a 7-1/2
year high of 121.86 and away from a 115.56 trough plumbed last week. The Australian Dollar was
becalmed at $0.8144, having slumped to a 4-1/2 year low of $0.8107 last week. Reassuring words from
the Fed on Wednesday, which said it would not raise interest rates in the next couple of meetings, have
since restored some semblance of calm. Traders, many of whom have already closed their books for the
year, said thin market conditions could lead to further choppy action in the next couple of weeks.
Monday, December 22, 2014
REGIONAL STOCK MARKETS % CHG
Yesterday
12.00
Year to Date
EGYPT
DOHA
BAHRAIN
DUBAI
ABU DHABI
JORDAN
LEBANON
SAUDI
MUSCAT
KUWAIT
10.00
8.00
6.00
4.00
2.00
(2.00)
(20.00) (10.00)
-
10.00
20.00
30.00
40.00
6.0
5.0
4.0
3.0
2.0
1.0
0.0
-1.0
-2.0
Spread to Bench
QATAR 4
01/20/15
QATAR 3
QATAR
QATAR
1/8
2.099
6.55
01/20/17 01/18/18 04/09/19
Sukuk
Today
01/01/2014
QATAR 5 QATDIA 5 QATAR 4
QATAR
1/4
07/21/20
1/2
3.241
01/20/20
01/20/22 01/18/23
Sukuk
QATAR 9 QATAR 6.4 QATAR 5
3/4
01/20/40
3/4
06/15/30
01/20/42
300
200
100
(100)
(200)
(300)
(400)
Spread bps
Yield %
QSOV. USD YIELD CURVE
CHART OF THE DAY
With leaders of the Federal Reserve and the European Central Bank facing splits in their respective policy committees, the yield difference between U.S. and German
bonds shows investors have been quicker to make up their minds. The CHART OF THE DAY shows the spread between their 10-year bonds expanded today to the
widest since 1999. It grew most recently after Fed Chair Janet Yellen suggested a “patient” approach to interest rates may translate into an increase by mid-2015 -- a
more hawkish scenario than some Fed officials endorse. In Europe, investors are pricing in the ECB buying sovereign bonds, a quantitative easing measure that
Bundesbank President Jens Weidmann said this week wasn’t needed. “The market seemed to be fixated with Yellen’s point about not moving in the next couple of
meetings, implying they could move in April,” said Richard McGuire, head of European rates strategy at Rabobank International in London. “That helped to push the
U.S.-Europe spread wider. Our view is that the U.S. cannot decouple itself from a slowdown that is global.” Investors pushed the German 10-year yield, the European
benchmark, down to a record low on Dec. 17, in a faster decline this year than seen in the corresponding U.S. rate. The American 10-year yield was at 1.61
percentage points more than the German at 12:40 p.m. London time, set for a 15-year high, compared with a spread at the start of this year at 1.1 percentage points.
Yellen said this week that there are a “range of views” on the Federal Open Market Committee about the timing of rate increases, as policy makers replaced a
calendar-based phrase with language that gives them more flexibility to respond to economic data. In Europe, Mario Draghi is set to battle German-led concerns over
the legality and even the need of government bond purchases. Draghi, the ECB president, has said that officials “don’t need to have unanimity” to act.
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Monday, December 22, 2014