Global Markets Weekly Report 17 th December Ehsan Khoman Head of MENA Research and Strategy

Transcription

1 Global Markets Weekly Report 17 th December 218 Ehsan Khoman Head of MENA Research and Strategy

2 Global Bond Yields Global bond yields were mixed as first a risk-on sentiment was spurred owing to hopes of a truce in the trade war, but then by the end of the week a risk-off mode kicked-in due to negative Chinese economic data (retail sales; industrial production) Maturity 7-Dec 14-Dec Change in Yield (bps) Advanced Economies Week MTD* YTD* US 1 yrs Germany 1 yrs France 1 yrs Italy 1 yrs Japan 1 yrs UK 1 yrs Emerging Economies Brazil 1 yrs China 1 yrs India 1 yrs Indonesia 1 yrs Benchmark 8.4 Yields Nigeria 1 yrs Russia 8 yrs South Africa 1 yrs Turkey 1 yrs MENA Economies Bahrain 5 yrs Egypt 6 yrs Qatar 12 yrs Saudi Arabia 1 yrs Abu Dhabi yrs Dubai 2 yrs Kuwait 8 yrs Oman 8 yrs Sources: Bloomberg, MUFG MENA Research; *Month to Date and Year to Date Global bond yields were mixed as first a risk-on sentiment was spurred owing to hopes of a truce in the trade war, but then by the end of the week a risk-off mode kicked-in due to negative Chinese economic data (retail sales; industrial production). Rising Yields Falling Yields 2

3 Global Exchange Rates The USD index rose (+1.% w/w) reflecting the larger uncertainties elsewhere heading into the festive season, thinning liquidity may be a potential issue that could see outsized responses to headlines, fanning the risk of end-year volatility Global Exchange Rates vs USD 7-Dec 14-Dec Change (%) Advanced Economies Week MTD YTD US Dollar Index Euro Area* Japan UK* Emerging Economies Brazil China India Indonesia 14,48. 14, Nigeria Russia South Africa Turkey MENA Economies Egypt Kuwait Bahrain Qatar Saudi Arabia UAE Oman PEGGED Sources: Bloomberg, MUFG MENA Research; * Exchange rate quoted as amount of USD per currency unit in line with market convention, other exchange rates are amount of currency per USD The USD index rose (+1.% w/w) reflecting the larger uncertainties elsewhere heading into the festive season, thinning liquidity may be a potential issue that could see outsized responses to headlines, fanning the risk of end-year volatility. Weaker Currency vs USD Stronger Currency vs USD 3

4 Global Equity Indices Global equity markets as investors are approaching the end of the year with considerable anxiety amidst ongoing trade tensions, Brexit uncertainties, slowing Chinese growth, and heightened geopolitical volatility across the globe Global Equity Indices 7-Dec 14-Dec Change (%) Advanced Economies Week MTD YTD US (S&P 5) 2,633 2, Europe (STOXX 5) 3,59 3, Japan (Nikkei 225) 21,679 21, UK (FTSE 1) 6,778 6, Emerging Economies Brazil (IBOVESPA) 88,115 87, China (Shanghai ) 2,66 2, India (CNX NIFTY) 1,694 1, Indonesia (Jakarta) 6,126 6, Nigeria (All Share) 3,819 3, Russia (MICEX) 2,412 2, S.Africa (J'burg 4) 44,779 45, Turkey (Istanbul 1) 93,699 9, MENA Economies Bahrain (BB) 1,32 1, Egypt (EGX 3) 12,388 12, Qatar (Doha 2) 1,598 1, KSA (Tadawul) 7,849 7, UAE (Abu Dhabi) 4,877 4, UAE (Dubai) 2,58 2, Kuwait (KSE) Oman (Muscat 3) 4,549 4, Global equity markets as investors are approaching the end of the year with considerable anxiety amidst ongoing trade tensions, Brexit uncertainties, slowing Chinese growth, and heightened geopolitical volatility across the globe. Lower Equity Index Higher Equity Index Sources: Bloomberg, MUFG MENA Research 4

5 Global CDS Spreads Global CDS spreads were broadly higher as markets remain apprehensive on the increasing uncertainty surrounding the global economic outlook with large volatility expected in the coming months ahead Global 5 Year CDS Spreads 7-Dec 14-Dec Change (bps) Advanced Economies Week MTD YTD US Germany France Italy UK Japan Emerging Economies Brazil China India Indonesia Nigeria Russia S.Africa Turkey MENA Economies Bahrain Egypt Qatar KSA UAE (Abu Dhabi) UAE (Dubai) Kuwait Sources: Bloomberg, MUFG MENA Research Global CDS spreads were broadly higher as markets remain apprehensive on the increasing uncertainty surrounding the global economic outlook with large volatility expected in the coming months ahead. Increasing CDS Spreads Decreasing CDS Spreads 5

6 Global Commodity Prices Oil prices fell (Brent USD6.3/b [-2.3% w/w]; WTI USD51.2/b [-2.7% w/w]) as investors have looked through the near-term favourable impact to oil prices and focused on the broader concern that US liquids supply growth supersedes demand growth Global Commodity Prices 7-Dec 14-Dec Change (%) Energy Week MTD YTD Brent WTI LNG Precious Metals Gold 1,249 1, Silver Industrial Copper 6,145 6, Steel Aluminum 1,955 1, Wheat Corn Cocoa 2,175 2, Oil prices fell (Brent USD6.3/b [-2.3% w/w]; WTI USD51.2/b [-2.7% w/w]) as investors have looked through the near-term favourable impact to oil prices and focused on the broader concern that US liquids supply growth supersedes demand growth Lower Commodity Prices Higher Commodity Prices Sources: Bloomberg, MUFG MENA Research 6

7 Global Economic Events Last week witnessed a lower-than-expected quarterly GDP figure for Japan; This week, the focus will be on the Fed announcement with an expected 25bps hike priced in Last Week s Data Review Country Event Period Consensus Actual Previous 12-Dec USA Crude Oil Inventories 7-Dec -3,168K -1,28K -7,323K 14-Dec USA Baker Hughes US Oil Rig Count 14-Dec Dec USA CPI, %, y/y Nov 2.2% 2.2% 2.5% 11-Dec Oman CPI, %, y/y Nov 1.1% 1.% 1-Dec Japan GDP SA, %, q/q Q3 -.5% -.6% -.3% Forthcoming Economic Events Country Event Period Consensus Actual Previous 19-Dec USA FOMC Rate Decision (Upper Bound) 19-Dec 2.5% 2.25% 21-Dec USA GDP Annualised, %, q/q Q3 3.5% 3.5% 19-Dec USA Crude Oil Inventories 14-Dec -1,28K 21-Dec USA Baker Hughes US Oil Rig Count 21-Dec Dec Bahrain GDP Constant Prices, %, y/y Q3 6.1% 18-Dec Qatar CPI, %, y/y Nov -.3% 2-Dec Saudi Arabia CPI, %, y/y Nov 2.4% 2-Dec UAE CPI, %, y/y Nov 1.6% 21-Dec Japan National CPI, %, y/y Nov.8% 1.4% 21-Dec UK GDP, %, y/y Q3 1.5% 1.5% Sources: Bloomberg, MUFG MENA Research 7

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