S&P revised outlook on Bahrain debt to stable

Ratings agency S&P revised its outlook on Bahrain to ‘stable’ from ‘positive’ as it expects the fiscal deficit to be wider than previously forecast at 3-4% of GDP (2-3% previously) on the back of higher debt service costs, increased spending on social subsidies and capex. While the government is not expected to achieve its goal of a balanced budget next year, S&P expects the government to continue with reforms including raising non-oil revenue through 2026.

US new home sales fell to a lower than expected 679k annualised in October, down -5.6% m/m. High mortgage rates continue to weigh on demand, but mortgage rates have eased over the last month which may encourage buyers if the trend continues. The median sale price of a new home is down more than -17% y/y, and inventory has increased to the highest level since January.

Today’s Economic Data and Events

19:00 US Conference Board Consumer Confidence (Nov) forecast 101.0

19:00 Richmond Fed Manuf. Index (Nov) forecast 1

Fixed Income

• The US yield curve steepened yesterday with the 10y yield up 1bp to 4.40% while the 2y yield fell by 2bp to 4.87%.
• Benchmark 10y yields were largely lower across the major developed markets with gilts down -7bp to 4.2% and bunds down -9.5bp to 2.5%.   

FX

• EUR continued its recent rally, gaining another 0.02% against the dollar yesterday, with JPY and GBP also strengthening against the greenback.
• The commodity currencies also started the week on a strong footing, with AUD up 0.3% and NZD up 0.2% against the USD.   

Equities

• Global equity markets closed slightly in the red yesterday, from Asia to the US. The S&P 500 was down -0.2% while the UK’s FTSE100 and France’s CAC40 were both down -0.4%.
• The DFMGI closed fractionally higher at 3994.59 (+0.1%) while ADGI and Tadawul ASI both closed lower yesterday. Egypt’s EGX30 gained 2.4% in yesterday’s session. 

Commodities

• Both WTI and Brent gained around 0.5% on Monday, despite the lack of progress on 2024 production quotas for OPEC+ members. Reports that Saudi Arabia is pushing for deeper cuts next year helped oil prices edge higher yesterday, but several member countries have pushed back against this, according to Bloomberg.