Saudi Arabia PMI rises in November

The Saudi Arabia PMI rose to 59 in November according to S&P Global, up from 56.9 in October. Output improved to 63.8 while employment also increased m/m. In Egypt the PMI also improved in November according to S&P Global, rising to a still-contractionary 49.2. Employment dropped, however, to 49.2 from 50.6 while new orders increased m/m.

Christopher Waller, a Fed governor, said he supported the FOMC cutting rates later this month but noted that disinflation “may be stalling” as recent inflation prints in the US have been fairly steady or slightly hotter than expected. Elsewhere New York Fed president John Williams said that there was “uneven” progress towards the Fed’s inflation target. Mary Daly, president of the San Francisco Fed, said that the Fed needed to “continue to recalibrate policy…whether it’ll be in December or some time later.”

The Caixin China services PMI dropped in November to 51.5, down from 52.0 a month earlier and missing expectations of an improvement. Services have been holding up relatively better in China than manufacturing though the index this year has been hovering close to the neutral 50 level nearly every month.

Today’s Economic Data and Events

• 17:15 US ADP employment change Nov: forecast 158k
• 19:00 US Factory orders Oct: forecast 0.2%

Fixed Income

• Treasury markets had a choppy session overnight. The 2yr UST yield oscillated but closed the day near flat at 4.1795% while the 10yr UST yield added 3bps to 4.2245%. Markets will be looking for the nonfarm payrolls report at the end of the week for more clarity on the next trajectory for rates.
• Futures markets are pricing in about a 74% probability of another 25bps cut to rates at the December 18 FOMC meeting following comments from several Fed officials.

FX

• The US dollar was softer against peers overnight, although only marginally lower. EURUSD added 0.1% to close at 1.0509 while GPBUSD was up by about the same amount to 1.2673. USDJPY was unchanged.
• The dollar was stronger against commodity currencies though. USDCAD was higher by 0.2% at 1.4069 while NZDUSD dropped by 0.1% to 0.5881.

Equities

• US equity markets had a mixed performance with the Dow Jones closing 0.2% lower while the S&P 500 ended the day flat and the NASDAQ was higher by 0.4%. European markets were more uniformly positive with a 0.7% gain in the Euro Stoxx index matched by a similar rise in the FTSE 100.
• In the region the Tadawul was higher by 0.65% overnight. Markets in the UAE were closed for public holidays.

Commodities

• Oil prices were firmer overnight as markets watch for the outcome of a new OPEC+ deal to delay returning production further in to 2025. Brent futures were higher by 2.5% to USD 73.62/b while WTI added 2.7% to USD 69.94b.
• OPEC+ is reportedly considering a three-month delay to adding barrels, according to market reports. The UAE, which had secured a higher quota for 2025 based on investment made into upstream capacity, is reportedly still able to increase production regardless of a wider OPEC+ deal.