US data shows more signs of weakness

US retail sales for September printed below expectations, rising by just 0.2% m/m while control group sales that feed into GDP calculations dropped by 0.1% m/m. The September print, while now quite stale data, represents a sharp slowdown in activity from the average of 0.7% m/m gains in the prior three months. Core retail sales slowed markedly to 0.3% m/m from an average m/m growth of 3.2% in the prior three months. Elsewhere, producer prices in the US rose by 0.3% m/m, principally down to higher food and energy prices. On an annual basis, PPI was higher by 2.7% while core PPI was more moderate with a 2.6% rise.

Consumer confidence in the US, as measured by the Conference Board, dipped in November to 88.7, its lowest level since April and below market expectations. There were deteriorations in both the current and forward looking components of the survey while the gap between those saying jobs were plentiful and those reporting they were easy to get has narrowed substantially in 2025.

ADP reported that private sector payrolls in the US dropped by an average of 13.5k per week in the four weeks ending November 8. The early November print represents a deterioration in labour conditions for the US after a drop of 2.5k in the prior four-week period. Markets are operating without official data for October as the BLS has confirmed that the month’s nonfarm payrolls report will not be published. The next NFP report covering November will only be released on December 16, after the Federal Reserve’s December 10 FOMC meeting.

S&P affirmed their ‘A’ rating on Ras Al Khaimah with a stable outlook. The rating agency noted Ras Al Khaimah’s “ongoing tourism and infrastructure” projects as supportive of the rating.

Today’s Economic Data and Events

• 16:30 UK budget released
• 17:30 US initial jobless claims Nov 22: forecast 225k
• 17:30 US durable goods Sep: forecast 0.5%

Fixed Income

US Treasuries rallied overnight, spurred on by the softer US data. Yields on the 2yr UST fell almost 4bps to close at 3.4586% while the 10yr yield dropped about 3bps to 3.996%. Market pricing for the December 10 rate decision has now increased to an 82% probability, having been less than 30% a week ago.

Bond markets had a positive close overnight with gains across US and European corporate and sovereign bonds. Regionally, Middle East bonds also pulled higher. An index of bonds from Qatar showed the strongest overnight move amid the region.

Following the downgrade of the sovereign rating on Bahrain, S&P lowered their rating on Mumtalakat to ‘B’ with a stable outlook.

Elsewhere Boubyan Bank was affirmed at ‘A’ with a stable outlook and NBK was upgraded to ‘A+’ with a stable outlook by S&P.

FX

The weak US data along with news flow suggesting a deal to end the Russia-Ukraine war may be close helped to support currencies against the US dollar overnight. EURUSD rose 0.4% to 1.157 while GBPUSD gained 0.5% to 1.3166 and USDJPY dropped by 0.5% to settle at 156.05. All markets are testing moderately stronger in early trade today.

In emerging markets, the Indian rupee stabilized around 89.22, Turkish lira was flat at around 42.45 and Egyptian pound closed at 47.82.

Equities

US equity markets extended their rally with a gain of 0.9% in the S&P 500, the NASDAQ up 0.7% and the Dow Jones rallying 1.4%. In Europe, stocks also pushed higher with both the Euro Stoxx index and the FTSE up 0.8%.

Locally UAE stocks fell. The DFM index was down by 0.1% thanks to declines in consumer focused firms and utilities. The ADX was lower by 0.1% while the Tadawul dropped 1.5%.

Commodities

Oil markets showed some substantial volatility as news reports that a deal to end the Russia-Ukraine war prompted a sharp sell off with Brent touching near USD 61.50/b. As it became clearer that no deal had yet been reached, prices managed to recover somewhat. Still Brent was lower by 1.4% on the day to USD 62.48/b while WTI was lower by 1.5% to USD 57.95/b.

In metals, gold prices were moderately lower overnight with few notable moves in the rest of the precious metals. A drop in aluminium prices was offset by a similar sized gain in copper forwards in the LME while iron ore edged up.