US data surprises to the upside

There were positive signals out from private sector US data with the ADP employment report estimating 42,000 jobs added in October and an upward revision to the September estimate to a decline of 29,000. While the overall trend in the ADP remains softer than levels since in H2 24 and H1 25, the increase for October was ahead of market expectations.

Elsewhere the US ISM services index rose to 52.4 in October from the neutral 50 level a month earlier. Most subcomponents were positive while input prices were moderating. Employment according to the services index also improved but remains in contraction at 48.2.

Producer prices in the Eurozone dropped m/m in September by 0.1%, below market expectations of no change. On an annual basis prices were 0.2% lower compared with a drop of 0.6% in August. Inflationary pressures have been waning in the Eurozone with CPI slipping to 2.1% y/y in October. Markets are now anticipating a long pause in rates from the ECB following 100bps of easing in 2025.

The UAE plans to spend AED 170bn on transport and road projects by 2030 to improve mobility in the country. The focus will include expanding highways and public transport, and developing light rail systems.

Today’s Economic Data and Events

11:00 GE industrial production m/m Sept: forecast 3%

14:00 EC retail sales m/m Sept: forecast 0.2%

16:00 UK Bank of England Bank Rate: forecast 4%

Fixed Income

The positive ADP and ISM report helped to push US Treasury yields higher overnight with the 2yr UST yield up 5bps to 3.6295% while the 10yr yield added 7bps to 4.1591%. Market expectations for the December FOMC pared back further to just 15bps of cuts priced in.

AviLease priced a USD 850m 5yr at +110.

Ittihad International priced its USD 550m 5yr at a yield of 7.375%

Gulf International Bank priced a USD 500m perp at 6.625%.

FX

The US dollar took a pause from several consecutive days of gains overnight. EURUSD added about 0.1% to 1.1492 while GBPUSD gained 0.2% to 1.305. USDJPY pushed higher, though, up 0.3% to 154.12.

In emerging markets the Turkish lira depreciated, rising by 0.7% to 42.0974 while the Indian rupee was stronger at 88.6563. Egyptian pound was steady at 47.4118.

Equities

Global equity markets recovered overnight as investors bought the AI-valuation prompted dip. The Dow Jones added 0.5%, the S&P rose by 0.4% and the NASDAQ rallied 0.7%. In Europe, the Euro Stoxx index gained 0.2% while the FTSE 100 was up 0.6%.

Markets in the UAE closed lower. The DFM fell 0.3% while the ADX was off by 0.6%. In Saudi Arabia the Tadawul was 1.2% lower.

Commodities

US commercial crude inventories rose by 5.2m bbl last week, offset by a draw in gasoline stockpiles of 4.7m bbl. Overall inventories across the whole barrel rose by 1.3m bbl. Production in the US was higher by 7k b/d to 13.65m b/d.

Oil prices extended their losses overnight with a drop in Brent futures of 1.4% to 63.52/b while WTI was lower by 1.6% at 59.60/b.

Precious metals prices were stronger overnight with gold closer to UDS 4,000/troy oz while silver prices settled above UDS 48/troy oz.

In industrial metals copper was the standout with a gain of 0.3%.