UK inflation rises in October

Headline CPI inflation in the UK picked up to 2.4% y/y in October, up from 1.7% in September and higher than the predicted 2.3%. Prices were 0.6% higher m/m, compared with no gain in September. The gain in core inflation was less pronounced as it rose to 3.3% y/y, from 3.2% previously, with the jump in headline price growth well anticipated as higher energy bills on a low annual base feed through. Services inflation meanwhile remained fairly sticky at 5.0%, up from 4.9% in September, so while the BoE is still expected to cut through the rest of the year this could be at a slower pace, with markets now pricing in just two more 25bps cuts in 2024 compared with three previously.

The delayed state asset sales in Egypt are starting once again as 30% of United Bank is up for sale in an IPO which could net as much as USD 104mn. The bulk of the share sale will be a private placement through November 25, with 5% set to be offered to the public from November 27 to December 3. Egypt’s sales of state assets, encouraged as part of its IMF programme in order to reduce the boost the role of the private sector in the economy and to help replenish government coffers has seen little activity over the past couple of years as the country struggled through an economic crisis. The IMF has been meeting with Egyptian representatives in recent weeks, with the Fund saying yesterday that discussions around the fourth review were ongoing and that it had encouraged Egypt to accelerate its divestments.

The European Central Bank issued a report yesterday which cautioned that the single currency bloc could face another debt crisis if it failed to curb ‘elevated debt levels and high budget deficits’. It asserted that the Eurozone needed to boost growth and productivity and fix policy uncertainty, while calling for greater adherence to fiscal rules.

Today’s Economic Data and Events

15:00 Turkey central bank rate decision. Forecast: 50.00

Egypt central bank rate decision

Fixed Income

• In the US, treasuries sold off yesterday with yields on the 2yr up 3bps to 4.3144% while the 10yr yield climbed 1bps to 4.4100%.
• UK gilts sold off at the longer end following the slightly higher than expected inflation print, and the paring back of bets on rate cuts from the BoE. Yields on the 10yr rose 3bps to 4.469%, while the 2yr closed almost flat at 4.405%.

FX

• The dollar index closed up 0.5% against its basket of peers yesterday. Gains were broad based, with GBP closing down 0.2% at 1.2652, EUR down 0.5% at 1.0544, and JPY losing 0.5% to 155.44.

Equities

• It was a lacklustre day for US equity markets as the S&P 500 closed flat, the NASDAQ dropped 0.1%, and the Dow Jones closed up 0.3%. Disappointing results from Nvidia have weighed on early morning trading in Asia today.
• Locally, the DFM added 0.6% while the ADX closed 0.1% lower. Saudi Arabia’s Tadawul ended the day down 0.1% also.

Commodities

• Oil’s rally at the start of the week came to an end yesterday, with both benchmarks selling off as US crude inventories rose by 545,000 bbls last week according to the weekly EIA report.
• Brent futures closed down 0.7% at USD 72.8/b, while WTI ended the day 0.8% lower at USD 68.9/b.