OECD expects global growth to hold steady at 3.2%

The OECD, in its September interim economic outlook, sees global growth holding steady at 3.2% in both 2024 and 2025. That is marginally lower than the 3.3% growth forecast for 2024 in the May economic outlook. US GDP growth is expected to slow from 2.6% in 2024 to 1.6% in 2025; while Chinese GDP is expected to miss its target, coming in at 4.9% in 2024 and 4.5% in 2025. The OECD expect inflation to slow to target across most G20 nations by end-2025, helping to boost real incomes.

Sales of new homes in the US declined in August, dropping 4.7% m/m to 716k, despite mortgage rates having fallen. The MBA reported that the US 30-year mortgage rate fell for the eighth consecutive week in the week ending 20 September. The August decline in new home sales does however follow a bumper July, with new sales being revised upward to 751k.

The UAE has concluded CEPA negotiations with New Zealand. The deal will eliminate tariffs on 98.5% of New Zealand’s exports once the deal comes into force.

Today’s Economic Data and Events

• 16:30 US durable goods orders (Aug). Forecast: -2.7% m/m
• 16:30 Initial jobless claims (w/e 21 Sept). Forecast: 224k

Fixed Income

• US treasury yields rose on Wednesday, with investors looking ahead to the PCE inflation data due out on Friday. The 2yr yield gained 2bps to 3.5592%, and the 10yr yield rose by 6bps to reach 3.7849%.
• Bond yields were higher across major European markets. The 10yr Bund yield rose just shy of 3bps to 2.173%. The UK Gilt yield rose 5bps to 3.988%.
• Saudi Aramco raised USD 3bn through a dual tranche dollar denominated sukuk, with pricing for a 5yr at +85 and a 10yr at +100.
• ADQ has raised USD 2bn on dual tranche benchmark deal. Final pricing saw a 7yr at +85 and a 30yr at +120.

FX

• The dollar spot index gained 0.4% on Wednesday, reversing the decline seen the day prior. EURUSD fell 0.4% to 1.1133, while GBPUSD declined by 0.7% to 1.3324. USDJPY rose by 1.1% to 144.75.
• Commodity currencies were also weaker against the dollar. AUDUSD fell 1% to 0.6823, NZUSD dropped 1.2% to 0.6263, and USDCAD rose 0.4% to 1.3485.

Equities

• US equity markets fell back during the course of Wednesday, with limited short-term data for investors to look to. Markets will be watching out for PCE inflation on Friday. The S&P 500 fell 0.2%, the Dow Jones declined 0.7%, and the NASDAQ rose by a marginal 0.04%.
• Major European equity markets also fell on the day, with investors reevaluating the efficacy of stimulus measures from China. Both the Eurostoxx 50 and the CAC 40 dropped 0.5%, while the DAX fell 0.4%. The FTSE 100 declined by 0.2%.
• Locally, the DFM rose 0.6% and the ADX gained 0.7%.

Commodities

• Oil futures fell on Wednesday, with initial optimism about Chinese stimulus measures fading. The EIA reported that there was a drawdown of 4.5m barrels in US crude inventories last week, taking inventories to their lowest level since April 2022. Brent fell 2.3% to USD 73.46/b and WTI declined 2.6% to reach 69.69/b.