Macro data continues to be mixed while markets power ahead

Edward Bell - Senior Director, Market Economics
Published Date: 30 November 2020


  • Measures of economic confidence deteriorated in November as economies were forced to re-enter lockdown conditions as the number of new Covid-19 cases has accelerated. In the Eurozone, the ESI measure slipped to 87.6 from 91.1 a month earlier, in line with soft overall output conditions that regional PMIs have displayed. In Turkey too economic sentiment deteriorated in November as the country’s economic confidence index fell to 89.5 from 92.8 a month earlier.
  • India’s economy contracted by 7.5% in Q3 compared with the same period a year ago. The country is now in a confirmed recession after a Q2 drop of nearly 25% y/y. Timelier indicators for India show that the country’s recovery is gaining some traction with the manufacturing PMI jumping to 58.9 for October. The RBI meets this week with our expectation that rates will remain on hold at 4% given the relative high levels of inflation: CPI growth has been above the RBI’s 4% ±2% since March this year.
  • China’s economy continues to show strong signs of recovery with the latest manufacturing PMI figures coming in at a three year high. The November manufacturing PMI rose to 52.1 from 51.4 a month ago while the services PMI rose marginally to 56.4 from an already strong 56.2 a month ago.
  • The Saudi Central Bank (formerly the Saudi Arabian Monetary Authority) has extended its loan deferral program until end Q1 2021, extending the pandemic relief offered to businesses.  The central bank said the deferral facility affected SAR 77bn worth of loans.  The Saudi Central Bank also updated its mandate to explicitly include supporting economic growth, rather than just monetary stability (including the maintenance of the USD peg) and overseeing the financial sector. 
  • Dubai has announced a reduction in electricity and water surcharges effective from 1 December, as it seeks to pass on cost savings from increased solar energy production to consumers.  Separately, local press reported that Abu Dhabi Ports would store 70mn doses of coronavirus vaccines in a temperature controlled warehouse, that will make Abu Dhabi a regional and global hub for the vaccine's distribution.

China PMI data show healthy rebound

Source: Emirates NBD Research

Fixed Income

  • US treasury markets were marginally lower over the course of the week as data came in mixed with new jobless claims numbers coming in higher than expected while durable goods orders managed to gain m/m in October. Yields on 10yr USTs closed the week at 0.8373%, negligibly higher than a week earlier. However, the end of week close was a reversal from an intraweek high of nearly 0.9%.
  • S&P affirmed their sovereign rating on Bahrain at ‘B+’ with a stable outlook..


  • Movement amongst major currencies was mixed last week. The DXY index, a measure of the dollar against a basket of major currencies,  retreated from highs of 92.800 early on and settled at a low of 91.782, close to its lowest point all year in September of 91.746, and this downtrend is likely to continue. USDJPY's reversal from highs of 104.76 extended beyond the 104 handle before finishing at 104.09, still an increase from the week prior's closing price but further losses are expected. 
  • The EUR settled at 1.1963, its highest point since April 2018, amid broad-based USD weakness. Sterling fluctuated between 1.3400 - 1.3260 before closing at 1.3311, reacting to renewed market pessimism regarding Brexit, particularly after Michel Barnier, the EU's chief negotiator, warned that big disagreements persist between the two sides. Both the AUD and NZD finished at their strongest points all year and their strongest points since 2018 at 0.7387 and 0.7027 respectively. Excellent Covid-19 containment in both countries have supported the currencies, alongside USD weakness. 


  • Benchmark equity markets ended the week on a high with gains across almost all major markets. The S&P 500 index added 2.3% in the holiday shortened week while the Dow Jones Industrial Average managed to push above 30,000 for the first time.
  • Regional equity markets started the week mixed. The DFM ended the day lower, down by 0.8% while the ADX and Tadawul both managed gains of 0.3% and 0.2% respectively.


  • Oil prices extended their rally for an additional week, the fourth one running. Brent futures settled up more than 7% at USD 48.18/b while WTI closed up more than 8% at USD 45.53/b. This week all eyes in the oil market will be focused on OPEC+ and whether they decide to rollover existing production cut targets for the first few months in 2021 or to carry on with tapering production cuts as their April 2020 agreement entails.
  • OPEC+ needed to call an emergency, extraordinary meeting over the weekend seemingly to get those countries that were not yet in favour of rolling cuts over on board with the deal. Oil prices are likely to be testy over the next few days and bounce off of competing headlines from the OPEC+ meeting.

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