Kuwait inflation slows in October

Headline CPI inflation in Kuwait slowed to 2.4% y/y in October, down from 2.8% the previous month. This marked the slowest pace of annual price growth since September 2020. Food price pressures have been more salient in Kuwait than in the rest of the GCC, averaging 5.5% over the year-to-date as shipping disruptions have impacted supply chains, but this slowed to 5.0% in October, from 5.8% in September. On the other hand, housing costs have not been rising at the elevated pace seen in Dubai and Saudi Arabia for instance, averaging 1.3% ytd.

Eurozone inflation for October was confirmed at 2.0% y/y on the final print, an acceleration on the 1.7% recorded in September. Prices were 0.3% higher than the previous month. Headline annual inflation is still in line with the ECB’s 2.0% target rate, and the uptick, which is expected to continue over the next several readings, is being driven primarily by energy and food costs. Core inflation stayed steady at 2.7% y/y, unchanged from the previous month. As such, the ECB is still likely to implement one more 25bps cut in December, taking the deposit rate to 3.0% by year-end.

Canada’s annual CPI inflation ticked up modestly to 2.0% y/y in October, up from 1.6% the previous month and higher than the predicted 1.9%. Prices were up 0.4% m/m, compared to a 0.3% fall in September.

Today’s Economic Data and Events

11:00 UK inflation, % y/y, October. Forecast: 2.2%

Fixed Income

• Bond yields fell yesterday as concerns around an escalation of hostilities around the Ukraine-Russia war led to a rush into havens across asset classes. Government treasuries saw increased demand push yields down, in contrast to the rise over the period following the US election.
• In the US, yields on the 10yr fell 2bps to 4.3962%, while the 2yr closed flat at 4.2803%. In the UK, yields on 10yr gilts closed 2bps lower at 4.442%.

FX

• The dollar index closed down 0.1% against its basket of peers yesterday, the second day of losses as the post-election Trump trade petered out.
• GBP closed up 0.03% at 1.2682, while EUR was also little changed at -0.02% to 1.0596.

Equities

• It was a volatile day for equity markets yesterday, with concern around the war in Ukraine leading to a sell-off in Europe, where all major indices sold off, with both the CAC and the DAX ending the day 0.7% lower.
• After opening lower at the start of the day, the S&P 500 rebounded to close up 0.4%, while the NASDAQ added 1.0% with tech stocks performing strongly ahead of Nvidia’s results later today. The Dow Jones closed down 0.3%.
• Locally, the DFM, the ADX, and the Tadawul all closed 0.4% higher yesterday.

Commodities

• Oil prices were little changed yesterday, with Brent futures steady at USD 73.3/b, while WTI ticked up 0.3% to close at USD 69.4/b.
• The weekly API report stated that there was a 4.8mn build in crude stockpiles last week, while fuel products fell over the week.
• The haven play over geopolitical concerns gave gold a boost yesterday, with the precious metal closing up 0.8% following a 1.9% gain on Monday.