Dubai budget announced

Dubai’s three-year budget spanning 2025-27 has been approved by HH Sheikh Mohammed bin Rashid al Maktoum, Vice President and Prime Minister of the UAE. This allows for total expenditure of AED 272bn (USD 74bn) and projects total revenue of AED 302bn, implying a budget surplus for Dubai over the period. The budget is the largest recorded for Dubai and AED 86.3bn of it is allocated for next year (compared with the budgeted AED 79.1bn for 2024). Revenues are forecast at AED 97.7bn next year. According to the Media Office statement, ‘Dubai remains focused on enhancing social services and improving the quality of life in key sectors such as health, education, culture, and infrastructure.’ Of next year’s planned spending, 46% is allocated to infrastructure investment and related construction projects including new roads, new bridges, the new airport development, and a revamped water drainage network all of which will support economic growth in the near term, and help the Emirate grow into its projected 5.8mn population by 2040. Of the remainder, 30% will go on social development (which encompasses health, education, and scientific research), 18% on the security, justice, and safety sector, and the remaining 6% on supporting the public services sector. The government projection is for a surplus of 4% of GDP next year.

Data out of the US was mixed overnight. Job openings in September fell to the lowest level since early 2021 as they dipped to 7.4mn, down from a downwardly revised 7.9mn in August and some way below the predicted 8.0mn. This deterioration would appear to contradict the run of otherwise robust labour market data seen since the last Fed meeting, so the data due over the rest of this week, including the NFP report on Friday, will be watched especially closely. On the other hand, the Conference Board survey put consumer confidence at the highest since the start of the year as it rose to 108.7 in October, up from 99.2 in September (itself revised up on its second reading) and beating the predicted 99.5. In contrast to the JOLTS figures, the number of consumers that believed that jobs were plentiful rose by nearly 4ppts to 35.1%, the most since June 2021.

Today’s Economic Data and Events

14:00 Eurozone Q3 GDP, % q/q. Forecast: 0.2%

16:15 US ADP employment change, October. Forecast: 110,000

16:30 US Q3 GDP, % q/q, annualised. Forecast: 3.0%

16:30 UK budget

17:00 Germany CPI inflation, % y/y, October. Forecast: 1.8%

Fixed Income

• US treasuries rallied yesterday, with yields on the 2yr falling for the first time in seven sessions, dropping 4bps to 4.0962% as the JOLTS jobs number came in weak. The 10yr yield slipped 3bps to 4.2541%.
• UK gilts have been selling off over the past week, in part on the back of reports in the UK press that Chancellor of the Exchequer Rachel Reeves plans to change the fiscal rules around government borrowing in her budget due this afternoon. Yesterday, yields on the 2yr closed up a further 5bps to 4.259% yesterday on the seventh straight session of gains, and is up 21bps from last Monday’s close. The 10yr has seen a similar run and closed up 6bps yesterday at 4.315%.
• Mubadala mandated banks for a AED 1bn 5yr sukuk priced at 4.6%, inside initial guidance.
• Islamic Development Bank has mandated banks for a EUR benchmark 5yr sukuk, according to press reports.

FX

• The dollar index closed flat yesterday. EUR was up by less than 0.1% at 1.0819, while GBP gained 0.3% to 1.3015. JPY was little changed at 153.36.

Equities

• European equity indices closed lower yesterday, with the DAX down 0.3%, the CAC down 0.6%, and the FTSE 100 closing 0.8% lower.
• In the US, the Dow Jones closed 0.4% lower but the S&P 500 (0.2%) and the NASDAQ (0.8%) both saw gains.
• Locally, the ADX added 0.1% while the DFM closed 1.0% higher.

Commodities

• Brent futures closed down 0.4% yesterday at USD 71.1/b, while WTI fell 0.3% to USD 67.2/b. Both benchmarks are picking up in early trading this morning.