29 August 2023
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Saudi reserves decline in July

By Daniel Richards

Saudi Arabia’s official reserves dropped to SAR 1.60tn in July, down 3.7% from the SAR 1.66tn the previous month and 8% lower than in July 2022. This was the lowest level since September 2010. Net foreign assets came in at SAR 1.53tn, continuing to decline (from SAR 1.59tn in June) despite the oil export windfall. Meanwhile, money supply accelerated modestly in July as it picked up to 9.3% y/y, from 9.1% in June.

Japan’s headline unemployment rate rose to 2.7% in July, up from 2.5% previously. The consensus expectation was for the jobless rate to stay at the same level. Meanwhile, the jobs-to-applications ratio slipped to 1.29, from 1.30 previously. Not a major decline, but the sixth in a row nonetheless. While the labour market data is still strong compared to much of the rest of the world, if the recent run of market tightness is starting to ease, this will make the central bank’s task of boosting inflation on a sustainable basis more difficult.

Today’s Economic Data and Events

  • 11:00 Turkey trade balance, July. Forecast: -12.4bn USD
  • 18:00 US conference board consumer confidence index, August. Forecast: 116.2

Fixed Income

  • US Treasuries pulled higher in limited UK-holiday trading to start the week. Yields on the 2yr UST dropped about 3bps to settle at 5.0479% while the 10yr yield fell 3bps to 4.202%.
  • Bond markets opened the weak quiet in general as the UK long weekend limited trading. An index of USD-denominated EM bonds pulled higher by about 0.1% while high yield bonds also rallied. In local currency markets, South African 10yrs rallied with yields down 5bps at 11.592% while Turkey 10yr yields dropped 1bps to 20.38%.


  • Currency markets generally pulled higher against the dollar to start the trading week. EURUSD added 0.2% to 1.0819 despite there being no material catalyst to pull the euro higher, apart from markets doubting whether the Fed will indeed proceed with further or extended rate tightening. GBPUSD added 0.2% to close at 1.2602 while USDJPY rose by less than 0.1% to 146.54.
  • Commodity currencies closed near unchanged apart from AUDUSD which settled higher by 0.4% at 0.6429.


  • East Asian equity markets started the week strongly, and while some of the gains were pared through the course of the session, they remained solidly higher than they opened at the end of the day. The Hang Seng added 1.0% and the Shanghai Composite gained 1.1% on the back of some market support measures announced by the government. In Japan, the Nikkei closed up 1.7% as it followed the gains in US equities on Friday.
  • The UK was closed on Monday and trading in the rest of Europe was somewhat quieter than seen in Asia. The composite STOXX 600 closed up 0.9% with the DAX adding 1.0% and the CAC 1.3%.
  • In the US, Dow Jones and the S&P 500 both added 0.6% while the NASDAQ gained 0.8%.
  • Locally, the DFM closed flat while the ADX dropped 0.2%. The Tadawul lost 0.1%.


  • Oil prices opened the week mixed and in thin trading. Brent futures closed marginally lower at USD 84.42/b while WTI rose by 0.3% to USD 80.10/b. Sinopec, a major Chinese national oil company, warned that demand growth would slow in H2 as diesel consumption drops off even as jet and gasoline demand remain healthy.

Written By

Daniel Richards Senior Economist

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