US labour market data softens

Initial jobless claims in the US rose last week to 231,000, their highest level since August this year. Continuing claims for the week ending November 4 rose to 1.87m, their highest level since 2021 and suggesting some softening in labour market conditions in the US. Elsewhere, industrial production in the US fell 0.6% m/m in October led by a drop in factory output as vehicle production has been affected by labour disputes in the US. Vehicle output fell 10% in October from a month earlier.

The IMF completed its Article IV review of Oman’s economy saying that Oman’s “economic recover continues” while economic growth will slow this year as the country participates in the OPEC+ production cuts. The fund described the economic outlook as “favorable” and that the current and fiscal account would “remain in surplus over the medium term.” The IMF also noted that “sustaining the momentum of fiscal reforms” was needed to ensure “fiscal sustainability.”

Today’s Economic Data and Events

• 11:00 UK Retail sales October: forecast 0.4%
• 14:00 EC CPI final October: forecast 2.9%
• 17:30 US Housing starts October: forecast 1.35m

Fixed Income

• US Treasuries rallied as the soft weekly labour market data from the US added more to the argument that the Fed is done raising rates. Yields on the 2yr UST fell 7bps to 4.8375% while the 10yr yield fell almost 10bps to 4.4355%. The move in USTs helped to push bonds higher in general with bund yields down 5bps at 2.587% and gilt yields falling 8bps to 4.143%.

FX

• Currency markets were relatively quiet overnight with EURUSD fading late session gains to close near unchanged at 1.0852. GBPUSD also had a limited change on close, settling marginally lower at 1.2414 while USDJPD moved lower by 0.4% to 150.73.
• Commodity currencies showed more consistent losses with USDCAD up 0.5% at 1.3755 while AUDUSD fell 0.6% to 0.647 and NZDUSD sank 0.9% to 0.5971.

Equities

• Global equity markets closed mixed overnight with limited headline data flow. The Dow Jones fell by 0.1% but was offset by similar sized gains in the S&P and NASDAQ. In Europe the FTSE pulled lower by 1% while the EuroStoxx dropped by 0.3%.
• Regional markets had a more positive day with the DFM up 0.6% and the ADX adding about the same amount. The Tadawul rose 0.5%.
• Asian markets have opened mixed today with the Nikkei flat while the Hang Seng is down more than 1.3%.

Commodities

• Oil prices recorded some steep losses overnight as the market repositions for softer demand heading in to 2024. Brent futures fell 4.6% to close at USD 77.43/b while WTI gave up almost 5% to USD 72.90/b. Forward curves also weakened with prompt spreads in both Brent and WTI now in contango.