18 September 2023
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US industrial production rises in August

By Daniel Richards

US industrial production rose 0.4% m/m in August, following a downward revision to 0.7% m/m growth in July. The outturn beat consensus expectations for a 0.1% m/m rise. Growth on the month was largely driven by higher energy extraction and power production, while the output of more interest rate sensitive goods – such as autos, construction supplies and transport equipment- was more lackluster. The start of auto workers strike action is likely to dampen industrial production in September.  

The New York Fed’s empire manufacturing survey, a measure of factory activity in the state, rose sharply in September. The survey measure rose almost 21 points from -19 in August to a value of 1.9, well above expectations for a rise to -10. A value above zero is an indication of an expansion in activity. The improvement was driven by stronger new orders and shipments. The New York Fed’s expected business conditions index also increased on the month, reaching its highest level since March 2022.  

The preliminary print of the University of Michigan consumer sentiment survey dropped in September, declining 1.8 points to 67.7. The fall in the headline index was driven by a decline in the current conditions index, with a noticeable deterioration is the durables buying conditions index. A rising share of consumers also reported that they expect the unemployment rate to rise over the next year. More encouragingly, the recent rise in fuel prices does not seem to have filtered through to inflation expectations, with both the 1-year ahead and 5-10 year ahead expectations declining. Expectations of 1-year ahead inflation fell to 3.1% y/y from 3.5% the month prior. 

Today’s Economic Data and Events

  • No notable data releases

Fixed Income

  • US Treasuries yields ended the day higher on Friday. The 2yr yield rose 2bps to reach 5.033% and the 10yr UST yield rose 5bps to reach 4.332%.
  • Longer-dated European bond yields rose, in general, on Friday. The 2yr Bund yield rose 7bps to 3.205%, while the 10yr increased by 8bps to 2.671%. Similarly, the 2yr Gilt yields rose 7bps to 4.995% and the 10yr Gilt yield rose 8bps to reach 4.352%.


  • EURUSD reversed some of the losses seen on Thursday last week, rising 0.13% by the end of the day on Friday, to reach 1.0657. In contrast, GBPUSD fell further on Friday, declining 0.2% to reach 1.2383.
  • Commodity currencies were generally weaker against the dollar on Friday. USDCAD rose 0.13% to 1.3525. AUDUSD and NZDUSD declined 0.12% and 0.22%, respectively, to reach 0.6432 and 0.5899.


  • Risk-on sentiment last week saw a rally in global equity markets, and most major indices ended the week higher. In China, the Shanghai Composite gained 0.6% w/w despite losses on Friday, while the Hang Seng ended Friday up 0.8% w/w. Japan’s Nikkei saw gains of 3.1% over the week.
  • The dovish interpretation of Thursday’s ECB meeting provided momentum to European markets, and the composite STOXX 600 ended Friday up 1.6% compared to the previous week. The DAX added 0.9% while the CAC gained 1.9% w/w. In the UK, the FTSE 100 closed 3.1% higher.
  • In the US, the risk-on sentiment waned on Friday, with selling at the close of the week leading to w/w losses for the S&P 500 and the NASDAQ, which were down 0.2% and 0.4% respectively. The Dow Jones eked out a w/w gain of 0.1%
  • Locally, the DFM closed down 0.6% w/w on Friday, while the ADX recorded a gain of 1.4% over the week. In Saudi Arabia, the Tadawul ended Thursday down 0.5% w/w, while Egypt’s EGX30 closed 0.9% higher w/w.


  • Oil prices marked a third straight week of gains last week, with both benchmarks closing materially higher as bets on market tightness in H2 rose. Brent futures added 3.6% w/w to close at USD 93.9/b while WTI gained 3.7% to USD 90.8/b.


Written By

Daniel Richards Senior Economist

Jeanne Walters Senior Economist

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