Japan GDP contracts in Q3

Japan saw GDP fall by 1.8% q/q annualised in the third quarter, compared with 2.3% growth in Q2, though it was a stronger print than the predicted 2.4% contraction. This marked the first fall in six months and strengthens the case for an expansionary programme under new Prime Minister Sanae Takaichi. Exports and private residential investment were among the key drivers of weaker output.

US data continues to be affected by the record-breaking government shutdown which ended last week, and data points that should have been released on Friday, namely retail sales and PPI, did not appear. We should start to see some key data points appear this week, however, with September’s nonfarm payrolls jobs report now scheduled for release on Thursday.

Etihad carried 16.1mn passengers over the first three quarters of 2025, y/y growth of 18% and a new record for the airline. This was achieved with a load factor of 88%, up from 87% last year, and a capacity expansion of 17%. This generated revenues of AED 21.7bn, up 18% y/y, and profit after tax of AED 1.7bn. The passenger traffic is driven by both transit traffic and an ongoing expansion in the Abu Dhabi tourism sector – Abu Dhabi hotels welcomed 2.9mn guests over the first half of the year, up 2% on 2024, while the emirate’s cultural and heritage sites saw over 4mn visitors in H1, up 47% y/y.

Today’s Economic Data and Events

17:30 Canada CPI, October, % y/y. Forecast: 2.2%16

Fixed Income

• US Treasury yields rose over the week as expectations of a December rate cut from the Fed diminished. The 2yr ended Friday at 3.6058%, up 4bps, while the 10yr added 5bps to close at 4.1483%.
• UK gilts sold off last week as it was reported that Chancellor of the Exchequer would not be pushing ahead with income tax rises as previously indicated. The 2yr yield closed 4bps higher w/w at 3.846%, while the 10yr rose 10bps to 4.574%.
• Central banks setting rates this week include Egypt and South Africa. The minutes from the US Fed’s October meeting are scheduled for release on Wednesday.

FX

• The dollar index lost ground against its basket of peers last week, ending Friday down 0.3% w/w despite a modest 0.1% gain on Friday. EUR closed up 0.5% over the week at 1.1621, while JPY weakened by 0.7% to 154.55 as expected expansionary government policy weighed on the currency.

Equities

• US tech stocks were under pressure last week and the NASDAQ ended Friday down 0.7% w/w. Losses elsewhere were less acute, and the S&P 500 (0.1%) and the Dow Jones (0.3%) closed higher over the week.
• European equities had a stronger week, with the CAC up 2.8% w/w and the DAX gaining 1.3%. The UK’s FTSE 100 lagged with a 0.2% gain amidst budget uncertainty.
• Locally, both the ADX and the DFM ended the week down 1.3% compared to the previous Friday.

Commodities

• Oil prices headed higher last week as geopolitical tensions ramped up once more, with Russian supply in focus after a drone attack on a major depot, and Iran intercepting a tanker passing through the Straits of Hormuz.
• Brent futures closed 1.2% higher w/w at USD 64.4/b, while WTI added 0.6% to USD 60.1/b.