Challenges lie ahead in Q4 2017

With the summer behind us but with only half of September gone, the challenge going forward is the anticipation and calibration of the key factors that lie ahead.

By Emirates NBD Research

With the summer behind us but with only half of September gone, the challenge of anticipating and calibrating the key factors that will define where markets go through the rest of this year is already quite immense.

Global macro: Geopolitical risks on the Korean peninsula and natural disasters across large areas of United States and the Caribbean may be at the extremes of what markets usually think about, but they are complicating perceptions about growth, inflation and policy responses.
GCC macro: As we head into Q4, data on the non-oil sectors show faster growth, but with very little jobs growth. Budget deficits are narrowing as oil revenues improve, but reform momentum has slowed.
Sector Focus: An overview of Dubai’s real estate sector.
Rates: Improving inflation data out of the US raised the December rate hike prospects to 50%, causing rates curves to shift upward and sovereign bond prices to fall during the month.
Credit: Rising benchmark sovereign yields weighed on corporate bond prices though much was counter balanced by tightening credit spreads amid manageable new supply and higher oil prices.
Currencies: Supported by constructive UK economic data, sterling outperformed the other FX majors in the last month helped along by a more hawkish Bank of England.
Equities: Notwithstanding the emergence of geopolitical risks over the past month, global equities are heading into the final quarter of 2017 with positive momentum.
Commodities: Oil markets are assessing whether OPEC needs to or has the will to extend its current production cuts beyond the end of 2018.