Dubai approves record budget for 2026-28

Dubai has approved the 2026-28 budget cycle and the annual budget for 2026. For next year, the Department of Finance projects expenditure of AED 99.5bn, a substantial increase from planned expenditure of AED 86.2bn for 2025. Infrastructure spending will be the largest share of total expenditure at 48% while social spending will account for 28% and spending on “security, justice and safety” will represent 18% of the total. For revenue, the government projects AED 107.7bn for 2026 and forecasts a budget surplus of AED 8.2bn or about 1.5% of the projected nominal GDP for next year. Over the total 2026-28 budget cycle, Dubai is projected by the Department of Finance to run a surplus of AED 26.5bn.

The UAE has established a USD 1bn “AI for Development” plan which will support economic development in African economies. The initiative will focus investments into education, agriculture and infrastructure and was announced during the participation of Sheikh Khaled bin Mohamed bin Zayed al Nahyan, the crown prince of Abu Dhabi, at the G20 summit held in South Africa.

Saudi Arabia is on track to implement foreign ownership rules for property in the Kingdom by January, according to an official at the Real Estate General Authority. Riyadh, Jedda, Mecca and Madinah will be available for foreign ownership and the share of foreign ownership in specific investable communities will be capped at 70-90%. Elsewhere, DHL will invest UDS 150m in a logistics hub in Riyadh adjacent to the airport and planned to be opened in 2027.

The Indian rupee hit a record low on Friday, sliding to USDINR 89.48. There was no specific catalyst for the sell-off but it was apparent that the RBI did not intervene to slow the slide in the value of the rupee. The rupee has depreciated this year as India has been hit with high tariffs from the US. A trade deal is still under negotiation between the two countries but a lack of visible news on the negotiations is feeding into uncertainty. Against the UAE dirham, the rupee has weakened to 24.3650.

Consumer confidence in the US deteriorated to 51.6 in November, down from 53.6 a month earlier, according to the latest survey by the University of Michigan. There was a drop in the current conditions element of the survey while year-ahead inflation expectations moderated to 4.5% from 4.7% in October. Consumers also reported a weakening in their assessment of household finances while job loss expectations also ticked higher.

The Bureau of Labor Statistics confirmed that it would not publish an October CPI report and that the next assessment of consumer prices in the US would be the November print, delayed until December 18. Following the scrapping of the October NFP report, that removes two key data points for the Federal Reserve could have considered ahead of its December 10 FOMC meeting. John Williams, the president of the New York Fed, said at the end of last week that he felt policy was still “modestly restrictive” and that there was “room for a further adjustment in the near term,” effectively putting a December cut back into the realm of possibility. After falling to a less than a 30% chance last week, markets are now pricing in more than a 60% chance of a 25bps cut in December.

In the US, the S&P Global PMI showed an improvement to 54.8 at the composite level. Services activity is holding up well at 55 while manufacturing slowed to 51.9, but staying above neutral.

PMI prints for Europe dropped in November. Germany’s composite PMI fell to 52.1 from almost 54 a month earlier thanks to weaker performance in both the manufacturing and services PMI. In France, the composite PMI remained below the neutral 50 mark thanks to services picking up to 50.8 while manufacturing softened. On aggregate for the Eurozone the composite PMI was 52.4, moderately weaker than a month earlier mostly down to a weaker manufacturing print. In the UK the composite PMI fell to 50.5 from 52.2 a month ago as services activity moderated. The release of the UK budget will be in focus this week.

Today’s Economic Data and Events

13:00 GE IFO business survey Nov: forecast 88.5

19:30 US Dallas Fed manf. Activity Nov: forecast -2

Fixed Income

Yields on the UST curve ended Friday lower following comments from New York Fed president Williams that boosted the prospect of a December rate cut. The 2yr UST yield fell almost 3bps to 3.5075% while the 10yr yield was 2bps lower at 4.0633%. Developed market bonds generally closed higher at the end of last week.

Regional GCC credit had a moderately softer close in line with weaker emerging market bond prices.

S&P raised their rating on Kuwait to ‘AA-‘ with a stable outlook but downgraded the rating on Bahrain to ‘B’ from ‘B+’. Bahrain’s outlook was revised to stable. Moody’s affirmed their ‘Caa1’ rating on Iraq with a stable outlook.

FX

The dollar gained against nearly all peers last week amid a mixed flow of data. EURUSD ended the week at 1.1513, down 0.1% on the day, while GBPUSD gained 0.2% to settle at 1.3099. USDJPY was lower by 0.7% in favour of the yen at 156.41.

The more notable moves in FX were in emerging market currencies with a sharp sell off in the Indian rupee, down 0.9% at 89.49, while the South African rand weakened 0.8% to 17.3783. Turkish lira was also softer at 42.43 while Egyptian pound was flat.

Equities

Benchmark equity indices in the US staged a modest pull back on Friday after some weaker performance earlier in the week. The Dow Jones rallied 1.1% while the S&P 500 added 1% and the NASDAQ gained 0.9%. European stocks were mixed with the FTSE up 0.1% while the Euro Stoxx was lower by about 1%.

Local markets in the UAE had a soft close on Friday with the DFM lower by 1.3% and the ADX down by 1.2%. The Tadawul started the week near unchanged.

Commodities

Oil markets had a soft close to the week with a drop in Brent futures of 1.3% to USD 62.56/b on Friday. WTI sold off by 1.8% to USD 58.06/b.

COP 30 concluded in Brazil with an agreement to triple adaptation finance for developing economies, establishment of dialogues on the connection between trade and climate (an oblique criticism of the EU Carbon Border Adjustment Mechanism) and did not explicitly detail plans for countries to move away from use of fossil fuels.

Gold prices were moderately weaker at the end of the week with a drop of 0.3% to USD 4,065/troy oz. Silver was also weaker.

Aluminium ended the week at USD 2,786/tonne while copper closed at USD 10,77.50/tonne.