Daily Economic Update

US: Reciprocal tariffs take effect dashing hopes of delays or exemptions, markets resume steep fall. “Liberation day” tariffs became fully effective today and there were no exemptions or delays for any trade partners, though President Trump mentioned that talks on trade deals with Japan and South Korea were looking good. He also doubled down on previously mulled tariffs on the pharma sector, saying this would be announced “very shortly.” US equity markets, which had fallen marginally on Monday, incurred steeper losses yesterday, with the S&P 500 giving back around a 4% intra-day gain and closing 1.6% down. In trading this morning, US equity futures point to another loss of around 2%, with many Asian markets also in the red at the time of writing. UST 10Y bond yields are up by over 15 bps this morning, moving above 4.4% (up more than 50 bps since last Friday) and their highest since February.

UK: House prices ease further in March according to Halifax data. UK house prices recorded another monthly fall, dropping 0.5% m/m in March following a slight decline of 0.2% in February as demand steadily returned to more normalized levels. On an annual basis, the price rise was steady at 2.8%. With previously announced stamp duty changes effective since the beginning of April, the UK housing market may see some more softness amid muted demand over the coming months as buyers had brought forward their purchases to benefit from existing stamp duty thresholds. Still, decent wage growth, modest unemployment rate and potential for further policy interest rate cuts could support prices later this year.

Egypt: Finance Ministry adjusts oil forecasts downwards. Egypt’s finance ministry now forecasts Brent crude to average $77 per barrel in FY 2025-26, down from $82 previously, amid signs of a global dip in oil prices. Brent has fallen 19% this month to $62.8, while WTI is below $60 — their lowest levels since early 2021. In response, the government is renewing hedging contracts with investment banks and securing strategic oil deals using hard currency. Lower oil prices are a positive for Egypt’s external balances, as the country is currently a net energy importer.    

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