Abu Dhabi raises funds at tight spreads

Abu Dhabi raised USD 3bn in a dual tranche bond issuance this week with pricing very tight to benchmarks. A 3yr tranche raised USD 1bn and priced at just UST+10bps while the 10yr tranche raised USD 2bn at UST+18bps. The spread over US Treasuries is among the tightest in emerging economies and inside that of some developed markets.

Dubai is planning measures to help reducing school fees by “offering subsidies” to school operators and also considering cutting land rents and potentially offering cheaper housing costs to teachers. There has been strong demand for private school placements in recent years as the population has growth with the KHDA allowing an increase in fees of 2.35% in the academic year 2025-26.

The UAE is in discussion with Canada to increase bilateral trade, according to a statement from Abdulla bin Touq al Marri, the UAE’s economy minister. Current bilateral trade amounts to around USD 3.5bn, dominated by UAE imports of Canadian goods. Canada is a potential source for agritech investment into the UAE as well potentially manufacturing.

The UAE will develop 13 new residential communities for citizens, providing 40,000 homes across Abu Dhabi City, Al Ain and Al Dafra region. At an overall investment of AED 106 bn (USD 28.8 bn), these projects are part of the Government’s ongoing commitment to provide stable economic and social development for citizens. With these new announcements, the total number of homes and plots under development by the Abu Dhabi Housing Authority will reach around 45,000, with proposed completion by 2029.

Mohammed bin Salman, the crown prince of Saudi Arabia, announced a freeze on rent levels in Riyadh for five years in an effort to halt the rise in housing costs in the Kingdom’s capital city. The freeze will apply to both commercial and residential properties. Saudi Arabia will also apply a new levy on vacant buildings to try and encourage more supply to come to the market. Housing has been major driver of inflation in Saudi Arabia in the last few years, particularly in Riyadh.

Saudi Arabia plans to increase its domestic debt markets, according to a statement from a member for the Capital Markets Authority, by increasing the level of borrowing, offering new products and raising foreign participation. The moves could see greater allocation of funds to Saudi bonds by raising the share of Saudi Arabia in benchmark bond indexes.

The Trump administration plans to impose tariffs of 100% on imported patented pharmaceuticals unless firms build manufacturing facilities in the US.

A revised estimate of US GDP showed the economy expanded by 3.8% in Q2 largely thanks to consumer spending. The estimate was revised up from 3.3% previously printed. Durable goods orders for August came in far stronger than expected on the headline measure with a 2.9% m/m increase while durables ex-transport costs were also positive at 0.4%. Initial jobless claims also pushed back against fears of labour market weakness with a drop last week to 218k, down from 231k a week earlier and far below market expectations. Continuing claims also printed below market estimates.

Today’s Economic Data and Events

16:30 US personal spending Aug: forecast 0.5%

16:30 PCE price index Aug: forecast 2.7%

Fixed Income

US Treasury yields dropped on further positive data coming out from the US, tempering the need for aggressive rate cuts from the Federal Reserve. The 2yr UST rose 5bps to 3.6553% while the 10yr yield added 2bps to 4.1698%. Market pricing for the October FOMC has cut back slightly to about 22bps and overall pricing for the rest of 2025 has now dropped to about 1.6 cuts.

FX

The US dollar held its ground for a second day running with a gain in the DXY index of 0.7%. EURUSD dropped by 0.6% for a second day, falling to 1.1666 while GBPUSD fell by 0.7% to 1.3345. USDJPY rose by 0.6% to 149.80.

Commodity currencies were lower across the board while in emerging markets overall moves were relatively quiet. USDTRY closed at 41.4897 while Indian rupee held at 88.6712.

Equities

Local equity markets were lower overnight with the DFM down almost 1% while the ADX fell by about 0.4%. Consumer firms in the DFM market were the major loss while real estate and utilities firms were also lower. In Saudi Arabia the Tadawul was lower by 1% after the strong gains earlier in the week with real estate and financials still positive yesterday, tempered by losses in utilities, energy and materials.

Benchmark global indexes fell with the Dow Jones lower by 0.4%, the S&P 500 off by 0.5% and the NASDAQ down by the same amount.

Commodities

Oil prices held steady overnight with Brent at USD 69.42/b and WTI at USD 64.98/b. Both contracts are on track for a decent weekly gain as the geopolitical backdrop is fraught with risks between Russia and NATO countries.

Precious metals prices were lower overnight while industrial metals broadly showed gains.