Deals announced around Saudi Crown Prince's visit to Washington

US President Donald Trump welcomed Saudi Crown Prince Mohammed bin Salman yesterday, where a raft of new strategic and business partnerships were announced. The Crown Prince agreed that the previously touted USD 600bn Saudi investment into the US would be bolstered to USD 1tn, while on the US’s part, there are plans to allow the sale of AI chips to Saudi firm Humain, with President Trump telling reporters ‘we are working on that.’ Saudi Arabia will also buy F-35 fighter jets from the US with Trump saying that USD 142bn of military equipment and services would be sold, a pledge that came alongside a new defence agreement and the designating of Saudi Arabia as a major non-NATO ally. The US will also hold negotiations with Saudi Arabia around developing a civil nuclear programme.

Further to Emirates’ announcement of an order for 65 Boeing 777-9 aircraft at the Dubai Air Show, other national carriers have also made significant orders. FlyDubai has announced an order for 150 Airbus A321, while Etihad has placed an order for 16 Airbus aircraft, including three aircraft. Aviation is an increasingly important driver of economic growth in both Dubai and Abu Dhabi, and the fleet expansions will couple with ongoing expansion of airport capacity to further boost the sector.

The UAE Central Bank has announced that the minimum salary requirement for accessing credit from the UAE’s banks has now been scrapped, leaving it up to the banks to set their own requirements. This will broaden financial inclusion in the country.

Oman’s CPI inflation for October came in at 1.5% y/y, up from 1.1% previously, while in Qatar annual inflation was at 1.1%, down from 1.2% in September. Inflation has been modest throughout the GCC this year.

Turkey’s house price index rose 31.6% y/y in October, down modestly from 32.2% the previous month. This compares with a peak of 187% in October 2022. The pace of price growth has been moderating along with headline CPI inflation which has slowed to 32.9% y/y in October, from a peak of 85.5% in October 2022.

With the extended government shutdown now over, labour market data is starting to come out of the US. Initial jobless claims for the week to October 18 stood at 232,000, while continuing claims ticked up to 1.957mn, from 1.947mn the previous week. September’s delayed nonfarm payrolls report is scheduled for release on Thursday. Industrial production data scheduled for release yesterday did not appear.

Today’s Economic Data and Events

11:00 UK CPI inflation, % y/y, October. Forecast: 3.5%

23:00 US October FOMC meeting minutes

Fixed Income

• USTs headed higher across the curve yesterday amid the tech selloff and the emerging weak labour market data.
• Yields on the 2yr ended the day 4bps lower at 3.5725%, while the 10yr fell 3bps to 4.1134%.

FX

• The dollar index closed modestly lower yesterday, snapping two days of gains, though it was down against its basket of peers by less than 0.1% and the performance was mixed across currencies.
• Both EUR and GBP closed down by 0.1%, at 1.1581 and 1.3145 respectively, while JPY weakened by 0.2% to end the day at 155.51.
• Commodity currencies performed more strongly as oil prices saw strong gains, with CAD strengthening by 0.5%, also bolstered by parliament passing the budget vote.

Equities

• Equity markets saw further losses yesterday as concerns around tech valuations heightened. The NASDAQ lost 1.2% and is now down 4.7% w/w, while the S&P 500 and the Dow Jones fell 0.8% and 1.1% respectively yesterday. Nvidia is set to announce earnings today.
• Locally, the ADX fell 0.3% and the DFM ended the day 1.0% lower. Saudi Arabia’s Tadawul closed up 0.4%, bolstered by the positive news around Crown Prince Mohammed bin Salman’s visit to Washington.

Commodities

• Oil prices saw solid gains yesterday, with both benchmarks closing higher. Brent futures closed up 1.1% at USD 64.9/b, while WTI added 1.4% to USD 60.7/b.
• The American Petroleum Institute reported a 4.4mn bbl rise in US crude stockpiles last week, which if confirmed by the official data due today would take the level of inventories to its highest in over five months.