11 September 2023
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G20 summit concludes in India

By Edward Bell

The G20 leaders agreed on a statement at the summit hosted by India where they pledged commitments to increase renewable energy capacity and to increase lending from multilateral institutions. The statement from G20 leaders also disavowed the use of force for territorial gain in reference to the was in Ukraine without casting Russia as the aggressor as previous statements had. China’s president Xi Jinping did not attend the event in India nor did Russia’s leader, Vladimir Putin.

During the G20, the US and EU supported the establishment of the India-Middle East-Europe Economic corridor that will link ports and rail infrastructure across several countries to improve trade relationships. The UAE, Saudi Arabia, Jordan, Israel and India will be able to integrate rail lines to allow faster movement of goods and reportedly increase the speed of trade between India and the EU by 40%. Undersea communications cables will also be part of the trading arrangement to allow faster digital communication.

Inflation in China turned positive in August with the consumer price index up 0.1% year/year after a dip into deflation in July. Transport and hospitality costs all seemed to be behind the higher CPI print though producer prices are still negative, falling 3% y/y although ticking up from a 4.4% drop in July. The deflationary signal in July came amid anxiety that China’s economy is headed from a disorderly unravelling as debt problems in the property sector weigh on growth.

Today’s Economic Data and Events

  • 11:00 TU Current account balance July

Fixed Income

  • US Treasuries pulled weaker at the end of the week even as there was no major economic catalyst to support a move. Yields on the 2yr UST rose 4bps to 4.9906% while the 10yr UST yield rose 2bps to 4.2641%. Markets are still pricing low odds of a move next week from the FOMC with about a 50% chance of a final 25bps hike at the November FOMC.
  • European bonds closed the week quiet ahead of the ECB meeting this week. Bund yields were near flat at 2.606% with minimal moves in French or Italian bonds. Market pricing for the ECB this week is about a 40% probability of a 25bps hike even as several ECB speakers have cautioned markets not to prematurely assume a dovish pivot.
  • Turkish and South African bonds dipped at the end of the week with local currency government yields up 7bps and 1bps respectively. A broad index of GCC bonds did push higher at the end of the week, however, with credit across major markets in the GCC rising.
  • The ECB will be the highlight among central banks this week where we still think a final 25bps move is possible though given the poor data out of major Eurozone economies lately, a skip may also be sensible.


  • Currency markets had a quiet end to the week with only JPY showing a substantial move. USDJPY added almost 0.4% to settle at 147.83 while EURUSD was near unchanged on the day at 1.07 handle and GBPUSD close at 1.2468.
  • In commodity currencies, USDCAD was the outperformer with a drop of 0.3% to 1.364 while AUDUSD closed unchanged and NZDUSD added 0.2% to 0.5884.


  • Most major global indices closed lower last week on a range of factors including weak economic data in the EU, Japan, and China, new restrictions on US tech from China, and an upside surprise in some key US data points that contributed to the higher-for-longer narrative. There was a little more positivity to close the week on Friday but it was insufficient to recoup earlier losses.
  • In East Asia, the positivity around the drip-feed of stimulus from China was ultimately outweighed by data that continues to indicate a flagging economy and weakening demand. The Shanghai Composite and the Hang Seng dropped 0.8% and 1.5% w/w respectively. Japan’s Nikkei fell by a lesser 0.4%.
  • The mood was similarly bearish in Europe for most of the week where the composite STOXX 600 ended the week 0.8% lower despite gaining on Friday. The CAC dropped 0.8% w/w while the DAX lost 0.6%. The UK’s FTSE 100 bucked the trend as it closed Friday up 0.2% w/w.
  • In the US, the NASDAQ was the biggest loser as tech stocks came under pressure. It ended Friday down 2.0%% w/w, with the Dow Jones losing 0.4% over the week and the S&P 500 1.1%.
  • Locally, the DFM dropped 0.6% w/w and the ADX 1.5%. On Thursday, Saudi Arabia’s Tadawul ended the week down 2.4%. A relative bright spot within the MENA region was the EGX30 which added 2.7% over the week. The index is now up 32.7% ytd, in part as a hedge against elevated domestic inflation.


  • Oil markets pulled higher at the end of the week with Brent futures up 0.8% at USD 90.65/b and WTI gaining 0.7% at USD 87.51/b. Natural gas prices rose as a strike at LNG facilities in Australia started at the end of last week.
  • Investor interest in WTI and Brent futures and options ticked up last week with net length in both markets rising by about 87k contracts. In the WTI market, net length is about 9% of open interest, up from less than 2% as recently as early July.
  • Industrial metals closed softer at the end of the week with LME copper down about 1% and iron ore slipping by 0.6%. Gold closed near flat at just under USD 1,920/troy oz.

Written By

Edward Bell Head of Market Economics

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