28 November 2023
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S&P revised outlook on Bahrain debt to stable

Daily Outlook

By Khatija Haque

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.

Written By

Khatija Haque Head of Research & Chief Economist


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