Iran tensions, Egyptian inflation jumps

The immediate threat of direct conflict between the US and Iran has diminished over the past day or so, supporting a rally in local and global financial markets. But the threat has not disappeared and Iran may instead turn its attention to stoking trouble elsewhere in the region, such as Iraq and Lebanon. Meanwhile, inflation in Egypt rose sharply in December, but we still think that the door is ajar for the central bank to continue its loosening cycle next week.