UAE cabinet approves federal budget

It was announced yesterday that the UAE cabinet has approved an AED 192bn, or USD 52.3bn, federal budget for the 2024 to 2026 period. Next year, the federal budget projects revenues of AED 65.7bn and spending of AED 64.1bn, which would leave the budget balance in a surplus. The allocated spending for next year also exceeds the figure given for the 2023 plans 12 months ago, which earmarked AED 63.1bn for spending. For the UAE’s overall budget balance in 2023 we forecast a surplus equivalent to 4.9% of GDP, and project that this will rise to 6.1% of GDP next year.

The IMF and the World Bank annual meetings have begun in Morocco yesterday, with the Bretton Woods institutions meeting against a backdrop of slowing global growth, geopolitical tensions across multiple continents, and the ongoing climate crisis.

Germany industrial production declined 0.2% m/m in August, a moderately weaker performance than the predicted 0.1% drop, although the July figure was revised to a 0.6% m/m fall, from 0.8% on the initial print. On an annual basis, production was down 2.0% compared to August last year. German industry continues to be buffeted by a range of global factors including weak demand from China and the tight monetary environment. Construction and energy were the primary drivers of the contraction, with a modest expansion in output recorded when stripping these out.

Today’s Economic Data and Events

• Egypt CPI inflation, % y/y, September
• 13:30 UK, BoE meeting minutes

Fixed Income

• There were wide-spread declines in European bond yields on Monday, while the US Treasury market was closed for a public holiday.  
• Yields on the 2yr UK Gilt fell by 5bps to 4.805%, while the 10yr yield declined 10bps to 4.475%. German Bund yields also moved lower on the day with the 2yr yield falling by 10bps to 3.02% and the 10yr yield declining 11bps to 2.768%.

FX

• EURUSD fell 0.2% to reach 1.0567 by the end of Monday. In contrast, GBPUSD was broadly flat from levels seen at the end of last week, finishing the day at 1.2238.
• Moves in commodity currencies were mixed against the dollar on Monday. AUDUSD rose 0.4% to reach 0.6411 and NZDUSD increased 0.6% to 0.6023, while USDCAD gained 0.5% to reach 1.359.

Equities

• Asian equity markets were mixed to start the week. The Hang Seng added 0.2% but the Shanghai Composite ended down 0.4% while Japan’s Nikkei closed 0.3% lower.
• In Europe, the FTSE 100 closed flat but the CAC (0.6%) and the DAX (0.7%) both ended the day lower.
• US equity markets picked up later in the day after some dovish commentary from Fed officials. The NASDAQ added 0.4% while both the S&P 500 and the Dow Jones closed 0.6% higher.

Commodities

• Oil prices rallied on the back of regional political developments, recouping some of the losses of the previous week. Brent futures closed up 4.2% to close at USD 88.2/b while WTI added 4.3% to USD 86.4/b. Both benchmarks are losing ground again this morning however.