Dubai inflation picks up in October

Dubai’s CPI accelerated to 4.3% y/y in October from 3.8% in September, the fastest rate of inflation since March. The move was expected and entirely due to higher transport costs as petrol prices rose in October. Housing was unchanged on an annual basis at 6.1% y/y. Inflation is likely to moderate again in November as petrol prices declined m/m, and we retain our forecast for average CPI at 3.5% this year, down from 4.7% in 2022.

The Chancellor of the Exchequer announced two key giveaways in the UK Autumn statement. The first is a 2ppt reduction to employee’s contributions to national insurance, and the second is making the current temporary measure allowing business to deduct 100% of investment spending against pre-tax profits permanent. The fiscal watchdog, the Office for Budget Responsibility (OBR), noted that while the announced measures reduce the tax burden by 0.5ppt, it still rises over the course of the next five years to a high of 38% of GDP. 

US initial jobless claims were lower in the week ending 18 November, dropping to 209k from an upwardly revised 233k the week prior. The outturn was weaker than the 227k that had been expected. There was also a fall in continuing claims for the week ending 11 November, the first fall in 2 months, with the measure declining to 1.84m.

US durable goods fell 5.4% m/m in October, exceeding the 3.2% decline that had been expected. The drop on the month comes after a downwardly revised 4% m/m rise in September and was driven by weaker commercial aircraft and auto orders. Growth in durable goods, excluding transport, were unchanged between September and October.

Today’s Economic Data and Events

12:15 FR HCOB composite PMI, November: forecast 44.9

12:30 GE HCOB composite PMI, November: forecast 46.3

13:00 EC HCOB composite PMI, November: forecast 46.8

13:30 UK S&P Global/CIPS composite PMI, November: forecast 48.7

15:00 TU one-week repo rate: forecast 37.5%

Fixed Income

• US Treasury yields gained on Wednesday, with some mixed data out of the US, including weaker durable goods orders and marginally higher near-term inflations expectations from the University of Michigan survey. The 2yr yield rose 3bps to 4.8996%, while the 10yr yield gained just 1bps to 4.4042%.
• Moves in major European sovereign bonds markets were mixed on Wednesday. Yields on 10yr Gilts rose 5bps to 4.1522%, after the UK Autumn Statement, while the 10yr Bund yield was broadly unchanged at 2.558%.

FX

• There were further gains for the dollar against a basket of 6 major peers on Wednesday. EURUSD declined 0.21% to reach 1.0888, while GBPUSD fell 0.36% to 1.2494.
• Moves in commodity currencies were mixed against the dollar. AUSUSD fell 0.2% to 0.6543, while NZDUSD dropped 0.45% to 0.6022. CADUSD fell 0.1% to 1.3687.

Equities

• After having fallen marginally on Tuesday, US equity markets resumed their rally on Wednesday, with investors assessing the outlook for the December Fed meeting given mixed data releases. The Dow Jones rose 0.53%, the S&P 500 gained 0.41% and the NASDAQ increased 0.46%.
• European equity markets generally also ended the day higher on Wednesday, fueled by gains in tech stocks. The Eurostoxx 50 rose 0.46%, the CAC 40 gained 0.43%, and the DAX was up 0.36%. The FTSE 100 was the outlier, falling 0.17% on the back of declines in heavy-weight energy stocks.
• Locally, the DFM rose 0.3% and the ADX closed 0.1% lower.

Commodities

• Oil prices fell on Wednesday, with the OPEC+ meeting originally scheduled to take place over the coming weekend now rescheduled to 30 November. Reports suggest that the reason for the delay was ongoing discussions between Saudi Arabia and African member countries about production levels. Brent futures fell 0.6% to close at USD 81.96/b while WTI dropped 0.86% to USD 77.1/b.