OPEC+ opts for a three month delay

Several members of OPEC+, including the UAE and Saudi Arabia, agreed to delay increasing oil production until the end of Q1 next year, their third delay after plans to originally increase production in October and December ran up against unfavourable market conditions. The countries in OPEC+ making these additional voluntary cuts will then phase their output back into the market from April next year until September 2026 and will still be producing below their official production quotas. The end of 2025 target level for the UAE is about 8% higher than its target level for the end of 2024 as the country has received a higher required production level to reflect upstream investment capacity. That will give the UAE room to increase oil production next year, adding to the growth outlook for the economy.

Initial jobless claims in the US rose to 224k last week, ahead of market expectations and their highest print in the last several weeks. The print may have been impacted by the effects of the Thanksgiving public holiday in the US at the end of November. Continuing claims for a week earlier fell to 1.87m.

Today’s Economic Data and Events

• 08:30 IN RBI repurchase rate: forecast 6.5%
• 11:00 GE industrial production y/y Oct: forecast -3.3%
• 17:30 US change in nonfarm payrolls Nov: forecast 220k
• 17:30 US unemployment rate Nov: forecast 4.1%
• 19:00 US University of Michigan Sentiment Dec: forecast 73.3

Fixed Income

• It was a choppy but limited day in US Treasury markets overnight. Yields on the 2yr UST added about 2bps on the close to 4.144% while the 10yr UST yield was marginally lower at 4.1761%. The 2s10s curve flatted by about 7bps to 11bps.
• Bond markets in general were positive, particularly across US markets. High-yield and emerging market bonds closed higher as well.

FX

• Currency markets were stronger against the US dollar overnight as the market looks ahead to the release of the nonfarm payrolls report later today. EURUSD rose by 0.7% to 1.0586 while GBPUSD added about 0.5% to 1.2759. USDJPY dropped by 0.3% to 150.1. Commodity currencies also fared well with USDCAD down by about 0.4% in favour of the Loonie while AUDUSD added 0.4% to 0.6453 and NZDUSD added 0.6% to 0.5886.

Equities

• US equity markets had a weak close overnight with all major indices lower. The Dow Jones fell 0.6% while the S&P 500 and NASDAQ were both weaker by about 0.2%. European markets were better with a 0.7% gain in the Euro Stoxx index and the FTSE adding 0.2%.
• Local markets were mixed with the DFM lower by 0.7% overnight while the ADX closed about flat. In Saudi Arabia the Tadawul index added bout 0.4%.

Commodities

• Oil markets were generally underwhelmed by the OPEC+ decision which came in broadly in line with market expectations. Brent futures fell 1.8% to USD72.31/b while WTI was off by 2% at USD 68.54/b. Assuming full compliance with targeted production levels, the oil market will still be in a surplus on average in 2025 after the announcement of the delay from OPEC+ countries.
• Gold prices were marginally higher overnight while most industrial metals ticked higher. Metals will be more in focus next week when Chinese authorities update their economic plans for next year.