20 September 2022
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Germany looks to secure energy supplies

By Daniel Richards

  • With the German economy under increasing pressure from the energy disruption caused by the fallout from the Russian invasion of Ukraine and the subsequent sanctions imposed by the EU, Bloomberg has reported that the government has set aside many millions of Euros for purchasing gas supplies, with some EUR 15bn allocated in credit lines. EUR 1.5bn has already been spent. Further, German Chancellor Olaf Scholz plans to visit the UAE, Saudi Arabia, and Qatar this weekend, with energy set to be a key discussion point. Germany is particularly exposed to the closure of the Nord Stream 1 pipeline earlier this month and is looking to secure alternative supplies as winter approaches.
  • The Indian and Saudi Arabian governments are looking at institutionalizing rupee-riyal trade according to the Indian government. The two countries are also looking at joint energy projects in India, including LNG infrastructure.
  • September’s FOMC meeting kicks off today, with the rates decision set to be announced 10pm tomorrow night, UAE time. A third 75bps hike is the most likely outcome, which would take the upper bound to 3.25%, although there has been discussion around the chance of an even bigger move of 100bps.

Key economic data and events

16:30 Canada CPI inflation, August, % y/y. Forecast: 7.3%

16:30 US housing starts, August. Forecast: 1.45mn

Fixed Income

  • US Treasuries drifted lower in minimal trading as markets were closed during Japanese and British trading hours. The 2yr UST yield added about 7bps to close at 3.9358% while the 10yr added 4bps to 3.4905%. The FOMC begins today with a 75bps hike expected from the Fed tomorrow evening UAE-time.
  • European bond markets also closed weaker as ECB speakers gave more notice of further tightening in monetary policy ahead. The 10yr bund yield added about 5bps to close just shy of 1.8% while the 10yr French yield added a similar amount to settle at 2.345%. UK markets were closed for the funeral of Queen Elizabeth II.


  • Currency markets were largely risk-on overnight, albeit in a limited way. EURUSD closed marginally higher at 1.0024 and is treading water in early trade today while GBPUSD added 0.1% to 1.1431. USDJPY closed up by 0.2% to 143.21.
  • Commodity currencies were more mixed with USDCAD managing to move in favour of the loonie, falling by 0.1% to 1.3251 and AUDUSD added 0.16% to 0.6727. NZDUSD was the odd one out, dropping nearly 0.5% overnight to 0.5960.


  • Following on from the surprise US inflation print last week, risk assets remain under pressure ahead of the upcoming FOMC meeting this week, with the expectation that rates will move higher faster and for longer weighing on equity markets, and on growth stocks in particular.
  • Japanese markets were closed to start the week, but those Asian equity markets that were open started the week on the backfoot as the risk-off sentiment seen on Friday continued. In China, the Shanghai Composite dropped -0.4%, while Hong Kong’s Hang Seng fell -1.0% and South Korea’s KOSPI ended the day down -1.1%. In early trading this morning, Asian shares have been picking up once more, following the rise in US markets.
  • UK markets were also closed yesterday for the funeral of Queen Elizabeth II, but selling pressure remained in play in much of the continent. The composite STOXX 600 ended the day -0.1% lower, with the CAC dropping -0.3%. The DAX, however, erased earlier losses to end the day up 0.5%.
  • In the US, markets picked up once more after Friday’s close saw the biggest weekly drop for several months. The Dow Jones, the S&P 500 and the NASDAQ added 0.6%, 0.7% and 0.8% respectively.
  • Locally, the ADX dropped -1.0% and the DFM -0.4%. The Tadawul ended the day -1.1% lower, while Egypt’s EGX 30 added 0.9%.


  • Oil prices had few material catalysts to affect them one way or another with the raft of central bank meetings this week likely acting as a headwind. Nevertheless, Brent futures managed to record at 0.7% gain to USD 92/b and WTI rose by 0.7% to USD 85.73/b.
  • ADNOC plans to increase its production capacity to 5m b/d by 2025, earlier than previously targeted, according to press reports. The UAE’s current capacity sits at around 4m b/d and the country has been spending heavily to increase its upstream capacity even under the constraint of OPEC+ deals that restrict output.

Click here for charts and tables


Written By

Daniel Richards Senior Economist

Edward Bell Head of Market Economics

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