Egypt’s pound hit a record low against the dollar on Wednesday after its central bank hiked interest rates by 600 points and devalued the currency.

The steps were meant to facilitate an agreement with the International Monetary Fund, which is expected to confirm the extension of its current $3 billion financial support package for Egypt.

The Egyptian pound was trading at roughly 50 to the dollar following the announcement, from 30.85 previously, according to LSEG data. The country’s key interest rate now stands at 27.25%, the central bank said Wednesday.

The development “shows that policymakers are committed to the turn back toward economic orthodoxy. This is likely to pave the way for an IMF deal within hours,” James Swanston, a Middle East and North Africa economist at London-based Capital Economics, wrote in a research note.

“This appears to be a positive step for Egypt on the path out of its current crisis,” he wrote.

This is a breaking news story, and it is being updated.

In January, Turkish inflation logged its biggest monthly jump since August with a 6.7% rise from December, while year-on-year inflation hit nearly 65%, according to the Turkish central bank’s figures released Monday.

The consumer price index for the country of 85 million people increased by 64.86% annually, up slightly from 64.77% in December. Sectors with the largest monthly price rises were health at 17.7%, hotels, cafes and restaurants at 12%, and miscellaneous goods and services at just more than 10%. Clothing and footwear was the only sector showing a monthly price decrease, with -1.61%.

Food, beverages and tobacco, as well as transportation, all increased between roughly 5% and 7% month on month, while housing was up 7.4% since December.

The monthly rises, economists say, stem from a significant increase to the minimum wage that Turkey’s government mandated for 2024. The minimum wage for the year has risen to 17,002 Turkish lira ($556.50) per month, a 100% hike from January 2023.

Turkey’s central bank has been on a prolonged mission to bring down inflation, implementing eight consecutive interest rate hikes since May 2023, for a cumulative 3,650 basis points. The bank’s latest increase, on Jan. 25, raised the key interest rate by 250 basis points to 45%.

The more conventional approach follows several years of unorthodox policy during which Ankara refused to tighten rates despite ballooning inflation. The lira is down 38% against the dollar year to date and has lost more than 80% of its value against the greenback over the last five years. 

The latest inflation print comes just days after Turkey’s central bank governor, Hafize Gaye Erkan, announced her resignation, saying Friday that the decision was due to a “reputation assassination” campaign and the need to protect her family.

Erkan became the bank’s central governor by presidential decree in June 2023, and led — along with Turkish Finance Minister Mehmet Simek — the turnaround in Turkey’s monetary policy and subsequent series of interest rate rises.

She was replaced on Saturday by the central bank’s deputy governor, Fatih Karahan, who spent nearly a decade as an economist at the Federal Reserve Bank of New York.

January’s inflation figures “highlight the continued strength of services inflation and may put pressure on new central bank governor Karaham to restart the central bank’s tightening cycle,” Liam Peach, senior emerging markets economist at London-based Capital Economics, wrote in a research note.

“The fact that inflation didn’t rise significantly more than expected in January is positive given the uncertainty about the impact of the minimum wage hike,” Peach wrote. “But the figures present a small setback to the disinflation process and highlight the continued strength of services inflation. For now, the central bank’s end-year inflation forecast of 36% remains intact.”  

The global economy does not need a “collapse” in order to bring inflation back to target and return to sustainable growth, according to Steven Wieting, chief investment strategist and chief economist at Citi Global Wealth.

Major economies have proven surprisingly resilient to sharp interest rate increases from central banks over the last two years. This has been particularly evident in the U.S., with recession thus far avoided and the labor market remaining robust.

Talk has now turned to rate cuts as inflation remains on a downward trajectory toward central banks’ targets, while growth has slowed.

Wieting told CNBC’s “Squawk Box Europe” on Monday that he is optimistic the global economy does not need an “economic collapse” to rein in inflation.

“We had one massive shock — one pandemic, one collapse. We didn’t need two recessions to ultimately cure our inflation problem,” he said.

“It’s holding down parts of our economy now — manufacturing and trade declines are happening around the world — but these are likely to bottom within the year.”

U.S. headline inflation came in at an annual 3.4% year-on-year in December, remaining above the Federal Reserve’s 2% target but down considerably from a peak of 9.1% in June 2022.

Investors will be closely watching Friday’s personal consumption expenditure (PCE) inflation figure, the Fed’s preferred metric, for further clues as to when the central bank will begin cutting rates.

Meanwhile, a preliminary estimate of fourth-quarter GDP is scheduled for Thursday, with the economy expected to have grown by 1.7%, its lowest rate since the 0.6% decline in the second quarter of 2022.

“This period of slower global growth and slowing employment growth in the United States we think can pass and lead to a healthier growth period if we take a look particularly at the next year and beyond, and that’s this year’s business for investors,” Wieting said.

He highlighted that while there is excess that needs to be worked out of the economy, this was not the result of a “true overheating” or prolonged “boom,” but instead of excess government fiscal stimulus related to the pandemic recovery that wasn’t going to be repeated.

“If you take a look at money supply in the United States, it declined 4% over the past year. Take a look at the 1970s, it was almost 10% growth for the entire decade, important prices surging 14% every single year — that’s … sustained inflation,” Wieting said.

“This story with just all of this government spending coming and going — upheaval in supply and demand, consumer spending going up or down 30% between goods and services, during the pandemic period — that’s not the environment we’re in any longer.”

Headline inflation in the euro zone jumped to 2.9% in December, up from 2.4% the previous month, though core inflation continued to ease.

The annual print was a little lower than the 3% forecast in a Reuters poll of economists.

Core inflation — which doesn’t include energy, food, alcohol and tobacco prices — cooled to 3.4% last month from 3.6% in November.

An overall rise was expected due to base effects from the energy market, as price falls moderate. Energy prices were down 6.7% year-on-year in December, versus a 11.5% fall in November.

Friday’s data will add to the debate over the trajectory of the European Central Bank’s policymaking, with markets expecting rate cuts to begin before the summer.

The headline inflation rise “is essentially a technicality,” Michael Field, European market strategist at Morningstar, said in a note.

“Oil prices fell massively from their 2022 highs, but in December the caps that many European governments had placed on energy prices ran out, meaning the prices consumers paid went up, which has impacted inflation,” Field said.

Central bankers were aware this spike could be coming and so it is unlikely to impact their decision-making, Field said, adding that January’s print will be crucial to see if the downward trend resumes.

LONDON — European stocks started the final session of 2023 higher, marking a positive end to a solid year.

The regional Stoxx 600 index was up 0.26% in mid-morning trade, with all sectors in the green. Thin trade is expected, while London markets close early.

Spanish pharmaceutical group Grifols was the biggest stock mover, climbing 8.9% after announcing it will sell a 20% stake in Shanghai RAAS, a blood products firm, to China’s Haier for approximately $1.8 billion.

The blue-chip benchmark Stoxx is set to have gained more than 12% in 2023, according to LSEG data, just about reversing its 2022 loss.

Germany’s DAX has risen nearly 20% despite the country’s gloomy economic picture, while France’s CAC 40 and the U.K.’s FTSE 100 have gained 16.3% and 3.64%, respectively.

In the U.S., the S&P 500 index is chasing a new record high to cap off the rally of the last two months.

Latest data releases, including Thursday’s on jobless claims, continue to suggest U.S. economic growth is slowing without grinding to a halt. Market bets currently place a 72.8% probability on the Federal Reserve beginning rate cuts as soon as March 2024, CME’s FedWatch shows.

In the final readings of the year, U.S. annual headline inflation had slowed to 3.1% in November from 6.4% in January.

That compared with a drop to 2.4% from 8.5% in the euro zone, and to 3.9% from 10.1% in the U.K. — both of which have also fueled expectations of rate cuts next year amid sharp economic slowdowns in both economies.

“The apparent loss of U.S. economic momentum in late 2023 suits the view that the full impact of aggressive US Federal Reserve rate hikes may still be in the pipeline,” economists at Berenberg said in a note Friday.

“Nevertheless, the Fed remains on track to pull off the usually elusive feat of a soft landing in 2024. The easing of underlying inflation has encouraged bond and equity markets to play the Fed pivot theme,” they added, though they do not expect the first cut until May 2024.

Data on Spanish inflation will be released on Friday.

U.K. house prices recorded a 1.8% fall in the year to December, according to lender Nationwide, a bigger drop than recent polls suggested but significantly lower than calls made for a fall of up to 10% earlier in 2023.

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China reported Friday its industrial output expanded at the fastest pace since February 2022 in November, though retail sales growth missed expectations, pointing to a patchy recovery in the world’s second-largest economy.

Economists are approaching the China data with some caution, given a low base effect. The country was in the final months of its stringent zero-Covid curbs in the last quarter of 2022, which had adversely impacted the economy.

“The data is a mixed bag,” Miao Ouyang, Bank of America’s Greater China economist, told CNBC. “If you look at the whole set of data, it still shows that domestic demand is still on the weak side…and [the government] still definitely needs to do more to stabilize the economy.”

China’s industrial output grew 6.6% in November from a year earlier, according to the country’s National Bureau of Statistics Friday. This outpaced expectations for 5.6% in a Reuters poll and follows a 4.6% rise in October.

Retail sales climbed 10.1% in November from a year ago, the fastest pace of growth since May — though analysts had expected a 12.5% spike following a low base in 2022. Retail sales rose 7.6% in October.

“Year-on-year growth in retail sales also rose in November, thanks mainly to faster automobile and Covid-sensitive restaurant sales growth on the back of favorable base effects, although this is well below market (high) expectations and implies a negative sequential growth,” Goldman Sachs economists led by Lisheng Wang wrote in a note.

Fixed asset investment in urban areas cumulatively grew 2.9% in the first 11 months of the year, compared with expectations for 3% growth. China’s urban unemployment rate stayed at 5% in November.

Hong Kong shares, among this year’s underperformers in Asia Pacific, saw gains briefly accelerate after the release of Friday’s data. The Hang Seng pared those gains to eventually close up 2.4% on the day.

The CSI 300 benchmark of the largest blue chips listed in Shanghai and Shenzhen gave up modest gains to close down 0.3% on the day.

The post-Covid recovery of the world’s second-largest economy has so far fallen short of expectations, plagued by a festering real estate crisis, debt risks and chronic youth unemployment.

A slew of policy support measures have not sufficiently lifted economic sentiment, igniting calls for Beijing to amp up its stimulus amid fears of a deepening slowdown.

Still, there are several green shoots that point to Beijing’s focus on growth, while also underscoring the depths of the real estate malaise.

On a cumulative basis in the first 11 months, investments in infrastructure and manufacturing increased 5.8% and 6.3%, year-on-year, respectively; retail sales rose 7.2%, while real estate development investment dropped 9.4%, China’s NBS said.

Official data released earlier Friday showed that China’s new home prices fell for the fifth straight month in November, underscoring weak confidence in demand and investment as some of the largest real estate developers are facing serious debt problems as Beijing strives to deleverage its once-bloated real estate sector.

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

A fierce winning streakU.S. stocks rose Tuesday to hit fresh winning streaks, their longest in three years. But Asia-Pacific markets were mixed Wednesday. Japan’s Nikkei 225 ticked down 0.1% despite rising confidence among large Japanese manufacturers, according to a Reuters Tankan survey. Meanwhile, Australia’s S&P/ASX 200 climbed 0.2% a day after the country’s central bank raised rates by 25 basis points.

Microsoft closes at a highMicrosoft shares climbed 1.12% to hit $360.53, a record high. It’s the eighth consecutive day in which the technology giant’s shares rose, a streak unseen since January 2021. Investors cheered Microsoft CEO Satya Nadella’s surprise appearance at OpenAI’s event, where he encouraged developers to build with Microsoft’s Azure cloud infrastructure.

‘Absolutely booming’ Chinese sectorChina’s economy hasn’t recovered from its pandemic blues. But in the sectors of “electric vehicles and everything around sustainability and renewable power technology,” China is “absolutely booming,” Standard Chartered CEO Bill Winters told CNBC. Relatedly, China’s truck industry is increasingly using vehicles with assisted-driving technology, a critical step toward monetizing the nascent business.

Peak, not pause?The U.S. Federal Reserve, European Central Bank and the Bank of England all paused interest rate hikes in recent weeks. This breather comes after dramatic hikes over the last 18 months as central banks grappled with unruly inflation. Some market watchers, in fact, think this lull in hikes isn’t so much a pause but the peak in rates — and are turning their attention to when central banks will start cutting.

[PRO] Buy BYDOver the past 18 months, Warren Buffett’s Berkshire Hathaway has sold more than half its stake in Chinese electric vehicle maker BYD, according to stock filings. Despite that, analysts still think BYD’s a stock worth buying — and some even raised their price targets for the firm.

Last month’s sudden surge in Treasury yields and oil prices — both of which tend to suppress investors’ appetite for stocks — looks to be ending. No, scratch that — the increases aren’t just ending, they’re ebbing.  

Look at oil: Contracts for both West Texas Intermediate and Brent futures fell around $3. WTI’s now at $77.01 a barrel while Brent’s $81.44, their lowest since July. That’s almost $10 per barrel less compared with a month ago, when prices jumped on fears triggered by the Israel-Hamas conflict.

Meanwhile, the 10-year Treasury yield fell around 10 basis points to 4.569% and the 2-year yield slipped 3 basis points to 4.915%. As Treasury yields serve as the benchmark for interest rates on loans and cash investments, sinking yields generally benefit rate-sensitive companies more. In other words: the Magnificent Seven Big Tech. Amazon led the pack, shooting up 2.13% yesterday.

That explains why the Nasdaq Composite jumped 0.9%, more than the S&P 500’s 0.28% gain and the Dow Jones Industrial Average’s 0.17% increase. Still, that’s not downplaying the movements. The S&P and Dow are enjoying their seventh consecutive session of gains, while the Nasdaq’s basking in its eighth.

If the U.S. Federal Reserve does indeed steer the economy to a soft landing, in which inflation is contained below 2% without the economy contracting, then there could be a further rally in stocks, said HSBC. Within periods of soft landings, the S&P has jumped, on average, 22% in the space between a pause and six months after rate cuts begin, noted HSBC’s global equity strategist Alastair Pinder.

And that immaculate disinflation isn’t just a dream. Chicago Federal Reserve President Austan Goolsbee told CNBC, “Because of some of the strangeness of this moment, there is the possibility of the golden path … that we got inflation down without a recession.”

Both the economy and markets have truly acted in strange, unprecedented ways ever since the pandemic. From one of the worst years for stocks and bonds in 2022, to a widely heralded bull rally in the S&P — and then a correction — in 2023. And I haven’t even started on the U.S. labor market and inflation numbers. Strange may be new and unsettling, but it isn’t necessarily bad.

LONDON — Stocks are heading for a bumper week, but there are many reasons to be wary, one strategist warned on Friday.

“In short, we don’t believe this rally,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, told CNBC’s “Squawk Box Europe.”

“We had tough later part of summer, there was focus on tightening of financial conditions, what was coming from the key central banks.”

“Nothing has changed in a fundamental manner. So we still think that we are going to see more problems ahead as this higher for longer rates profile beds in and starts to impinge on the real economy,” Ahmed said.

The pan-European Stoxx 600 index is on course for its best weekly performance since late March, according to LSEG data. That comes off the back of a dire October, which was its worst month of the year, and losses in August and September.

Stateside, the Dow Jones Industrial Average notched its best day since June on Thursday.

Along with equities, U.S. and European government bonds have also rallied this week as investors interpreted the Federal Reserve’s rate hold and surrounding commentary as a sign that rates have peaked and cuts are within view. That was despite Fed Chair Jerome Powell’s insistence that further hikes were not off the table — in line with central bank heads in the U.K. and European Union.

“If you look at Chair Powell’s speech, it had a hawkish bias to it,” Ahmed said.

Markets are focusing on the sharp increase in long rates, which is helping the Fed tighten financial conditions — but a hot jobs print on Friday and another sticky print on inflation could well force it to implement another hike, Ahmed added.

It is “premature” to bet on a cut to interest rates, Francois Villeroy de Galhau, France’s central bank governor, told CNBC, as market players consider whether the European Central Bank has reached peak rates.

“We should remain at this level for a sufficiently long period of time,” he told CNBC’s Annette Weisbach exclusively on Monday. “Betting now on the next cut is probably premature.”

The ECB hiked rates once again earlier this month, bringing its main deposit rate to 4%. The benchmark rate stood at -0.5% in July 2022 before the central bank embarked on an intense rate hiking cycle in an effort to tackle high inflation.

Data for August showed that headline inflation in the euro zone came in higher than analysts had expected at 5.2%, down from 5.3% the previous month.

This is a breaking news story and it is being updated.

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Stocks under pressureU.S. stocks fell Thursday, their third losing day in a row. The 10-year Treasury yield touched 4.284%, the highest since October. Asia-Pacific markets retreated Friday as investors digested more bad news about China’s real estate sector. Hong Kong’s Hang Seng Index lost around 1.4% while the mainland Shanghai Composite inched down 0.3%. Separately, Japan’s headline inflation in July held steady at 3.3%.

China’s property troublesEvergrande Group, a heavily indebted Chinese property developer, filed for Chapter 15 bankruptcy protection in a U.S. court Thursday. The statute protects non-U.S. companies that are undergoing restructuring from creditors. It’s another stark sign of how China’s property sector hasn’t improved since its slump in 2020, intensifying calls for policymakers to step in.

Bright spots in Chinese economyChina’s economy may be struggling, but there are bright spots in the consumer economy, according to earnings reports from big Chinese companies. JD.com saw electric and home appliance revenues rise 11.3%, Tencent saw 150% year-on-year growth in gross merchandise value and Alibaba’s Tmall sales increased 21% year over year to 30.16 billion yuan ($4.1 billion).

Bitcoin plungesBitcoin fell sharply to $26,308, its lowest level in almost two months, after minutes of the Federal Reserve’s July meeting were released. The Fed’s warning that sustained inflation could lead to more rate hikes — and a higher chance of an engineered recession — probably triggered a sell-off in risky assets like cryptocurrency, said Sylvia Jablonski, chief investment officer at Defiance ETFs.

[PRO] Headwinds in AugustThe S&P 500 is down 4% so far this month, putting it on pace for its worst one-month decline since December. There are a few factors for the slump: zero-day options, weak technicals and a weak Chinese economy. CNBC Pro’s Fred Imbert breaks down each headwind and gives suggestions on how investors can protect their portfolios.

Rising U.S. Treasury yields are straining stocks. Minutes of the Federal Reserve’s July meeting triggered the 10-year yield to rise more than 2 basis points to hit its highest level in almost a year. But at 4.282%, it’s still lower than the benchmark interest rate of 5.25% to 5.5%.

That’s not even taking into account the last rate hike that the Fed had projected for the year, which would take rates to a range of 5.5% to 5.75%. Investors had hoped — and bet — that the Fed would stop hiking after its meeting in July.

Those bets are slowly unwinding. There’s a 33.2% chance that the Fed will increase rates by 25 basis points at its November meeting, according to the CME FedWatch Tool.  Those odds were only 27.8% a week ago.

And with rates possibly going higher than that if inflation resurges — as the Fed warned in its minutes — yields could climb further still.

Investors didn’t like the sound of that. The S&P 500 lost 0.77%, the Dow Jones Industrial Average fell 0.84% and the Nasdaq Composite declined 1.17%. All three indexes closed below their 50-day moving average — the first time for the Dow since June.

Trading was brisk, too, suggesting investors sold off stocks because they feared more losses. The SPDR S&P 500 ETF, a fund that tracks the S&P index, traded 95.3 million shares, above its 30-day moving volume of 72.4 million

Indeed, investor sentiment nosedived this week, according to the latest American Association of Individual Investor weekly survey. Just 35.9% of investors are bullish about the next six months, down from 44.7% last week and 49% two weeks ago. The decline snapped a 10-week streak when bullishness had exceeded the historical average of 37.5%, the AAII said.

It’d be a stretch of the imagination, however, to say that a bear market is back. All indexes are still above their 200-day moving average. The S&P is around 9.31% off its record high and has rallied about 14% this year. It’s important to keep in mind that August has historically been a slow, and bad month for stocks. But August is just one month.

— CNBC’s Scott Schnipper contributed to this report