US government shutdown comes to an end

The US House of Representatives has voted to pass a temporary spending bill, ending the longest US Government shutdown in history. The bill, which passed with a 222 – 209 margin, will now go to President Trump for signing. The agreement allows for the Departments of Agriculture and Veteran Affairs, as well as Congress to be fully funded, while some other departments and agencies will be funded until the end of January. The bill does not include the extension of Affordable Act subsidies. Markets will now be looking to the release of delayed data prints, although the White House confirmed on Wednesday that the October NFP and CPI prints were unlikely to be released at all.

Consumer price inflation in India fell to 0.25% y/y in October, down from 1.44% in September, markedly below the Reserve Bank of India’s 2-6% target range. The outturn was below consensus expectations for a print of 0.4%, and the weakest reading since the series began in 2012. The decline is attributable to a 3.7% y/y decline in food prices, together with lower goods and services tax rates. The latest data strengthens the case for a reduction in rates by the Indian Reserve Bank in December.

Today’s Economic Data and Events

• 10:00 SR CPI (Oct)
• 11:00 UK GDP (3Q). Forecast: 1.4% y/y
• 11:00 UK industrial production (Sept). Forecast: -1.3% y/y

Fixed Income

• US Treasuries rallied when the market reopened on Wednesday, reacting to weak new ADP private payrolls data for October. The 2yr yield fell 2bps to 3.568%, while the 10y yield declined by 5bps to 4.0693%.
• Bank of Sharjah has mandated banks for a 5-year USD benchmark bond, priced at T+145.
• Majid Al Futtaim has mandated banks for a USD benchmark 5.25% perpetual.
• Dubai Islamic Bank has mandated banks for a 5-year USD benchmark bond, priced at T+90.
• FAB has mandated banks for investor calls on a potential Euro-denominated Benchmark Long 5Y Green Bond.

FX

• The dollar was broadly stable against a basket of major peer currencies on Wednesday, with the spot index 0.05% higher. EURUSD rose 0.1% to 1.1593, while GBPUSD fell 0.1% to reach 1.3133. USDJPY rose 0.4% to 154.79, raising speculation that Japanese authorities could step in.
• In emerging markets, USDTRY fell 0.2% to 42.1215, while USDINR rose 0.1% to 88.6413.

Equities

• US stocks market moves were mixed on Wednesday. The Dow Jones rose 0.7% and the S&P 500 gained 0.06%, while the NASDAQ fell 0.3% as tech shares struggled.
• Major European equity markets saw gains on the day, driven by solid earnings reports. The Eurostoxx 50 rose 1.1%, the FTSE 100 increased by 0.1%, the CAC 40 gained 1% and the DAX rose 1.2%.
• In the UAE, the DFM fell 0.5% and the ADX declined by 0.6%. The Tadawul dropped 0.1%.

Commodities

• Oil prices fell sharply on Wednesday, following an OPEC report which suggested supply exceeded demand in the third quarter. Brent futures fell 3.8% to USD 62.71/b and WTI declined by 4.2% to USD 58.49/b.
• Gold prices rose 1.7% to USD 4195.39/troy oz, while silver gained 3.96% to reach USD 53.25/troy oz.