US Q3 GDP in focus this week

UK retail sales fell by a larger than forecast -0.9% m/m (-1.0% y/y) in September, providing further evidence of a slowing UK economy. While warm weather was cited as a reason for slow sales last month, high inflation and rising unemployment has also likely weighed on consumer confidence and purchasing power. Labour market data for August will be released this week, as will preliminary PMI data for October.

In the US, the focus this week will be on the first estimate of Q3 GDP growth, which is forecast at 4.3% q/q annualized, up from 2.1% in Q2, underpinned by robust personal consumption spending. Personal income and spending data for September will also be released later this week.

The Bank of Canada and ECB will hold monetary policy meetings on Wednesday and Thursday respectively, with both expected to keep rates on hold. Turkey’s central bank meets on Thursday also, and another 500bp rate hike is expected by the market.

The UAE and Singapore have signed a number of MoUs to boost cooperation in the green economy, digital government, education, AI, cybersecurity and other sectors during an official visit to the UAE by Singapore PM Lee Hsien Loong.

No key economic data due today

Fixed Income

• After a volatile week US treasuries recovered on Friday, although yields were still higher on a w/w basis. 2y treasury yields rose almost +2bp w/w to 5.07% while 10y yields rose +30bp w/w to 4.91% at Friday’s close. Bonds sold off across most major markets last week after geopolitical tensions in the middle east pushed up oil prices, raising inflation risks.

FX

• Higher rates have supported the US dollar which has rallied strongly since July. However the USD index weakened by half a percent last week with CHF and EUR gaining the most against the greenback. EM currencies and commodity currencies were also slightly weaker against the USD by the end of last week.

Equities

• Most equity markets closed lower on Friday as a risk-off tone dominated ahead of the weekend. The S&P500 and Nasdaq Composite lost -2.4% and -3.2% respectively last week, with the S&P500 closing below its 200-day moving average for the first time since March. Energy stocks were the worst performers in Friday’s session, while consumer staples held up best, down just -0.4% on Friday.
• In Europe, the composite European STOXX index has dropped 3.5% w/w and the FTSE 100 dropped by 2.6% w/w. In Asia, The Shanghai Composite ended the week 3.5% lower, the Hang Seng recorded a loss of 3.5% w/w and Japan’s Nikkei ended up with a 2.1% loss w/w.
• UAE and Saudi Arabia equity indices also closed lower on Friday, with the DFMGI down more than 5% for the week. The ADGI closed almost -2% lower w/w while the Tadawul ASI lost -0.4% over the week to Sunday 22 October.

Commodities

• Brent oil closed up 1.3% w/w at USD 92.16/b at Friday’s close, while WTI rallied 2% last week to close at USD 88.08/b, as geopolitical tensions in the middle east remained elevated. While there has not been any disruption to the production or distribution of oil in the region, there is a higher risk premium reflected in prices.
• Gold gained 1.6% on Friday and ended the week 2.5% higher.