UK retail sales see robust rise in August

UK retail sales (including fuel) rose in August, gaining 1.0% m/m, significantly higher than consensus expectations for a 0.4% m/m rise. The July growth figure was also revised higher, up to 0.7% m/m from an initial print of 0.5%. Supermarkets and clothing retailers appear to have benefited from the warmer and dryer weather conditions experienced in August. The strength of consumer spending, likely supported by rising real incomes, should provide momentum to GDP growth in Q3.

The European Commission Eurozone consumer confidence index rose to -12.9 in the provisional September reading, from -13.4 in August, beating consensus expectations. The improvement was likely driven by a decline in inflation pushing real incomes higher, outweighing concerns around sluggish economic activity in the bloc.

UAE President, Sheikh Mohammed bin Zayed Al Nahyan, is scheduled to meet Joe Biden today, as part of a state visit to the US. Officials indicated that talks would focus on expanding cooperation between the two nations in the fields of “artificial intelligence, renewable energy, climate and space”.

Today’s Economic Data and Events

• 12:00 EZ composite PMI (Sept). Forecast: 50.6
• 12:30 UK composite PMI (Sept). Forecast: 53.5
• 17:45 US composite PMI (Sept). Forecast: 54.7

Fixed Income

• US treasury yields rose marginally on Friday, reversing some of the fall seen earlier in the week. The 2yr yield rose 1bps to 3.5910%. The 10yr yield gained 3bps on the day, and 9bps on a week-on-week basis, rising to 3.7413%. Fed governor, Christopher Waller, signaled in a speech on Friday that he would be open to a further 50bps cut in the Fed funds rate should data continue to soften.
• Bond yields were generally higher across major European markets. Both 10yr Gilt and Bund yields rose 1bps to 3.9015% and 2.206%, respectively.

FX

• Moves against the dollar were mixed on Friday, although the spot index ended the day 0.11% higher. EURUSD was unchanged at 1.1162, while GBPUSD rose 0.28% to 1.3321. USDJPY gained 0.86% to 143.85.
• Commodity currencies were generally weaker against the dollar on Friday. AUDUSD fell 0.1% to 0.6807, NZDUSD declined 0.02% to 0.6238, and USDCAD rose 0.07% to 1.3569.

Equities

• US equity markets ended the week higher, for a second consecutive week, despite seeing some falls on Friday due to profit-taking. The S&P 500 fell 0.2% on Friday, but gained 1.4% on a w/w basis, while the NASDAQ fell 0.4% on the day but gained 1.5% w/w.
• Major European equity markets also saw declines on Friday, with falls led by automotive and luxury goods companies. The Eurostoxx 50, CAC 40 and DAX all fell in the region of 1.5%, while the FTSE 100 declined 1.2%.
• Locally, the DFM gained 0.34% and the ADX declined 0.36%.

Commodities

• Despite continued geo-political tensions in the Middle East, oil futures fell marginally on Friday. Brent declined 0.52% to reach USD 74.49/b while WTI inched lower by 0.04% to USD 71.92/b.