Waller calls for December rate cut

Fed governor Christopher Waller called for a December rate cut in one of the most explicit statements from a Fed official in the run up to the December 10 FOMC. Waller said he was mostly concerned about the labour market in support of a rate cut next month and that after that the Fed may take “more of a meeting by meeting approach.”

ADNOC has committed to spending USD 150bn for 2026-30 with plans to increase capacity and invest overseas. ADNOC presently has capacity of 4.8m b/d with plans to increase it 5m b/d. XRG, an internationally focused investment arm of ADNOC, has reportedly increased its value from USD 80bn at its launch last year to more than USD 150bn.

Akdital Holding, a Morocco-based private health care operator, may invest in the UAE and Saudi Arabia to build hospitals and health care facilities. The company already operates a hospital in Riyadh and may spend as much as USD 1.6bn in both the UAE and Saudi Arabia. Health care has been one of the fastest growing sectors in the UAE’s economy in recent quarters, rising by more than 11% in the first quarter of this year.

Today’s Economic data and events

17:30 US retail sales Sept m/m: forecast 0.4%

17:30 US PPI Sept m/m: forecast 0.3%

19:00 US Conf. Board Consumer Confidence Nov: forecast 93.3

Fixed Income

US Treasury yields were modestly lower at the start of the week with the 2yr closing at 3.4969, down 1bps, and the 10yr lower by almost 4bps at 4.0248%. Following Fed governor Waller’s comments, markets are now pricing back in a 75% chance of a December rate cut.

The Central Bank of the UAE sold AED 11.4bn in m-bills at its regular auction at the start of the week. The bank solid AED 2.295bn of 28-day m-bills at a yield of 4.13%; AED 1.58bn of 42-day m-bills at a yield of 4.09%; AED 2bn in 126-day m-bills at a yield of 4.06% and AED 5.5bn of 294-day m-bills at a yield of 3.97%.

FX

Currency markets showed limited moves overnight with the US dollar mostly lower against peers. EURUSD closed at 1.1521 while GBPUSD ended the day at 1.3105. USDJPY was higher by 0.3% at 156.89.

In emerging markets, the Indian rupee clawed back some of its loses from the prior session, closing at USDINR 89.24 or about 0.3% stronger against the dollar. Turkish lira was flat at 42.426 while Egyptian pound weakened to 47.7686.

Equities

US equity markets had a strong open to the week, propelled by the NASDAQ which rallied 2.7%. The S&P 500 gained 1.6% while the Dow Jones was higher by 0.4%. European markets closed mixed with a 0.3% rise in the Euro Stoxx index while the FTSE closed with a lower bias.

In the UAE, the DFM closed lower by 0.1% while the ADX was off by 0.3%. For the DFM, the losses were attributed to communication, industrials and real estate equities. In Saudi Arabia, the Tadawul dropped 1.4%.

Commodities

Oil markets started the week on a positive footing with Brent up 1.3% to USD 63.37/b and WTI gaining the same amount to USD 58.84/b. Both benchmarks are tracking geopolitical headlines and whether the Russia-Ukraine war will be brought to an end under the terms of a US negotiated peace deal.

Gold prices edged up yesterday with a 1.8% rise to USD 4,136/troy oz, leading the rest of the precious metals complex higher. Industrials metals were broadly higher with gains in aluminium and iron ore though copper was modestly softer.